ANALYSIS: Television - China's balancing act with media - Media will be a secondary beneficiary of WTO even as membership promises to prise open the economy

<p>What a ride China has had in the past few months. The World Cup </p><p>finals, the Beijing Olympics win, the surprising rapprochement with the </p><p>US, the hosting of the APEC conference (with George W. Bush attending </p><p>despite waging war on terrorism) and last and most significantly, </p><p>accession to the World Trade Organisation. </p><p><BR><BR> </p><p>China has gotten what it wished for, which begs the subtle doubled-edged </p><p>meaning this statement implies: is it for the better or worse? </p><p>Particularly, how will it affect the "opening" of media in China? </p><p><BR><BR> </p><p>Media will only be a secondary beneficiary of WTO as the principal </p><p>sectors addressed were naturally export and import-related, such as </p><p>agriculture, manufacturing and textiles. Given the social and political </p><p>combustible potential of media, it was and is just too sensitive to </p><p>tinker with right now. </p><p><BR><BR> </p><p>A recently-reported example underscores this hypersensitivity. </p><p>Supposedly, the Ministry of Foreign Trade and Economic Cooperation has </p><p>had the terms of the WTO agreement that affect insurance under 24-hour </p><p>top secret guard because it is fearful that the public's reaction to </p><p>disclosure of its contents would be rage. </p><p><BR><BR> </p><p>But isn't this action - prospective damage control regarding the flow of </p><p>content over media - media sector-related? This is but one indication of </p><p>how nervous the central Government must be in trying to propel the </p><p>country forward without sinking the Chinese Communist Party's </p><p>superstructure in the process. Part of the ballast required to </p><p>successfully navigate the troubled waters ahead was to postpone media </p><p>issues. </p><p><BR><BR> </p><p>Aside from any ideological or political considerations, this solution </p><p>seems compellingly practical. Timing in life is everything; however, the </p><p>timing of WTO accession, while arguably the best possible in the last </p><p>five decades, is still far from ideal. China has followed the </p><p>enlightened direction blessed by Deng Xiaoping and implemented by the </p><p>policies of Jiang Zemin, Zhu Rongji and other reformers. And it has been </p><p>rewarded with unprecedented economic growth. Attendant upon this is one </p><p>of history's greatest high-wire walks. </p><p><BR><BR> </p><p>Notwithstanding great strides in GDP, in many ways the WTO step is </p><p>zero-sum; many will have to lose before all can benefit. The Government </p><p>is all too aware of the dark side of the huge population base, still the </p><p>largest on this planet, and its demographic characteristics. </p><p><BR><BR> </p><p>From a media perspective, most of China's 1.3 billion people are no </p><p>longer in the dark. With 94 per cent TV penetration every night, some </p><p>350 million or more TV screens light up. About a billion are </p><p>farmer-peasants, employees of state-owned enterprises or among the </p><p>already unemployed, and their families. These segments are the ones that </p><p>are expected to suffer the most pain, at least in the short term, as a </p><p>result of WTO. </p><p><BR><BR> </p><p>Even the middle class stratum will not escape the competitive stress of </p><p>many new foreign companies, more sophisticated, capitalised and with </p><p>long familiarity complying with international standards, breaking into </p><p>their previously-protected markets. </p><p><BR><BR> </p><p>Under what cloud of optimistic delusion should anyone think that Beijing </p><p>would consider intranational augmentation of media dissemination to the </p><p>unemployed and the hungry, let alone its opening to the international </p><p>media community?At least intermittently, the media will be </p><p>tightly-managed to prevent the masses from experiencing any more of the </p><p>side effects of the bitter medicine WTO causes than is absolutely </p><p>necessary. </p><p><BR><BR> </p><p>Zhou Enlai once characterised "China (as) an attractive piece of meat </p><p>coveted by ..." The coming sea change will be rough enough given the </p><p>backdrop of hundreds of millions of unhappy, and perhaps at times </p><p>unruly, people; and that economy must be kept at full throttle just to </p><p>keep the social dislocations from metastasising into revolutions; and, </p><p>hordes of carnivorous foreign firms eager to tear off a piece of </p><p>China. </p><p><BR><BR> </p><p>Assuming this is the perception, should we reasonably expect that the </p><p>grip on information flow through media would be loosened short-term? </p><p><BR><BR> </p><p>"WTO accession" are not magical words which will immediately transform </p><p>China's bureaucracy into a well-oiled machine capable of dealing with </p><p>the myriad legal, technical and procedural adjustments required. For a </p><p>long time to come the interface will be like "ducks talking to geese" - </p><p>a lot of conversation but no one understanding what the other is </p><p>saying. </p><p><BR><BR> </p><p>Millions of bureaucrats will have to first learn a new mindset. They </p><p>must acquaint themselves, then understand, then modify, then implement, </p><p>then enforce thousands of laws, rules, regulations, customs and </p><p>practices. </p><p><BR><BR> </p><p>A gargantuan task described by one mainland savant as a blind man riding </p><p>a blind horse. </p><p><BR><BR> </p><p>Each of the above undertakings would in any other national context be </p><p>separately considered a daunting task, but China has to do all of them </p><p>at once. That is not all. The incumbent leadership will officially be </p><p>turning the Government over to a new regime by 2003. It is gainsaid that </p><p>President Jiang wants history's adulatory review to be assured by no </p><p>misstep occurring during the closing time of his rule. </p><p><BR><BR> </p><p>Obviously, he wants to step down as a winner. Perhaps this is what Zhu </p><p>Rongji is also doing by retiring. One thing is for sure, neither he, his </p><p>heir apparent Hu Jintao, or Zhu want to see the boat rocked any more </p><p>than it has to be. Media must be their friend, not a potentially </p><p>disruptive threat. </p><p><BR><BR> </p><p>In light of the above scenario, it is exceedingly rational, reasonable </p><p>and arguably imperative that the central Government will brace itself in </p><p>a defensive posture by maintaining the status quo regarding the </p><p>destabilising potentiality of media. This should be expected at least </p><p>until the new Government is well on its feet and the principal trading </p><p>changes, SOE restructuring and the unpleasant impositions of WTO </p><p>membership have lost their traumatic effect. </p><p><BR><BR> </p><p>Media won't be liberalised or opened until it has to be. The last thing </p><p>the leadership wants during the coming period of adjustment is to have </p><p>tens or even hundreds of millions of desperate, disgruntled and </p><p>displaced citizens watching western TV programmes, showing high </p><p>standards of living, political freedoms and products they not only </p><p>cannot enjoy, but may never even dreamed existed. </p><p><BR><BR> </p><p>The same fears cover print, radio, and of course, the internet. Last </p><p>month some 17,000 internet cafes were closed for failing to install </p><p>software to block objectionable content. </p><p><BR><BR> </p><p>Yet all is not gloom and doom. While recent months have seen what some </p><p>industry observers conclude is a reactionary retrenchment, such as the </p><p>ultimatum to impose a unified satellite platform for foreign TV channels </p><p>into China, there have also been truly landmark steps taken toward </p><p>substantive progress. </p><p><BR><BR> </p><p>Almost simultaneously China granted broadcast rights to CETV (AOL/Time </p><p>Warner) and Phoenix Satellite TV. These are the first true legal </p><p>licenses providing real and direct access to a domestic PRC audience. </p><p>Admittedly the licences are limited geographically and thereby </p><p>demographically to an attractive area of one of the most progressive </p><p>parts of China - the Pearl River Delta in Guangdong. </p><p><BR><BR> </p><p>Another positive sign, which should not be occurring if the central </p><p>Government was really reactionary, is forming a super- committee to </p><p>reconcile friction between the Ministry of Information Technology and </p><p>the State Administration of Radio, Film and Television. </p><p><BR><BR> </p><p>The importance of this is apparent because Zhu Rongji will head it. </p><p>Neither would it be a surprise to see a push at the State Council level </p><p>to exhort all ministries and branches, even media-related, to find ways </p><p>to commercially exploit, but not privatise, the asset bases of their </p><p>operating branches. </p><p><BR><BR> </p><p>Into this unfamiliar exploration and restructuring to generate revenues </p><p>are opportunities for media players to become involved, or more </p><p>involved. </p><p><BR><BR> </p><p>And the time is now. To the victor belongs the spoils; but to the </p><p>long-term strategic participants belongs the victory. </p><p><BR><BR> </p><p>Further, the correlation of advertising expenditures to GDP growth is a </p><p>valid principle, and applicable to China. Adspend, currently in decline </p><p>in China, has lots of room to grow to catch up with developed </p><p>countries. </p><p><BR><BR> </p><p>So, as the world's economy recovers, and if China can hit its targeted </p><p>annual growth of seven per cent GDP, the total ad pie between now and </p><p>the Beijing Olympics could grow significantly. This will nourish media </p><p>as a whole, and, when coupled with the global significance and impetus </p><p>of the 2008 Olympics to media, one should expect that media would see </p><p>meaningful "opening" reach China a few years ahead of the Olympic </p><p>torch. </p><p><BR><BR> </p><p>The encouraging news is that it is the ideal time for media companies to </p><p>position themselves for the future. At a Beijing investor conference on </p><p>November 17, an investment banker was asked what three areas he thought </p><p>would be the best for investment in China. The first, he said, was </p><p>media; nothing to dispute there. </p><p><BR><BR> </p><p>But the uphill ride of the past few months has been just the mechanical </p><p>pull up on the proverbial roller coaster. </p><p><BR><BR> </p><p>China knows some hair-raising dips have yet to come and it is steeling </p><p>itself for them. So it won't embrace opening the media sector during the </p><p>ride; only when it is successfully over. And while the ride will take </p><p>several years, longer than many might like, there are reasons to remain </p><p>confident that the tracks will hold and bring the cars safely to their </p><p>planned destination. </p><p><BR><BR> </p><p>The opposite is unthinkable. </p><p><BR><BR> </p>