China Restricts Flow of Economic, Financial News
In an attempt to regulate foreign news agencies that sell and distribute economic information on Chinese financial markets, the government on Tuesday issued a Cabinet edict requiring foreign agencies operating in China to come under the supervision of the official New China News Agency.
The government said the move was made by the ruling State Council to “safeguard state sovereignty, protect the legal rights and interests of the Chinese economic information users and promote the healthy development of the country’s undertaking of economic information.”
Although the precise effects of the edict were not immediately clear, it prompted protests from the Clinton administration, economists and news organizations whose operations could be directly affected, with all of them saying it raises the specter of censorship.
The State Department said the move could “restrict the amount and type of information about economic matters in China,” and it called on the government to reconsider or suffer damage to its credibility on economic issues and to its “overall economic prospects.” In Geneva, diplomats said China’s action threatens its bid to join the World Trade Organization.
With the rapid growth of China’s economy, the increased presence of U.S. companies here and the listing of Chinese stocks and bonds on foreign exchanges, the demand for--and flow of--financial information to and from China has been building rapidly in recent years.
Many news organizations, including Dow Jones, Reuters and Bloomberg Business News, have set up online news and data-retrieval operations here. Those organizations were among those protesting the loudest Tuesday.
“On the face of it, this has extremely serious editorial implications for Reuters as well as for many other organizations active in China,” said a spokesman for Reuters in London.
Dow Jones, which offers its online Telerate financial information service in China along with a news service bureau in partnership with Associated Press, said in a statement Tuesday that it views the edict as a “matter of great concern. . . . It also seems inconsistent with the spirit of world trade in services as well as goods.”
Others saw it as perhaps less ominous. Making the New China News Agency the regulator of financial news could be a benign attempt to calm the recent volatility of Chinese financial markets, one observer said.
Or it could simply be a government grab for a piece of the profits being generated by news organizations serving the market for Chinese financial data, said Nicholas Lardy, an economist at the Brookings Institution.
Lardy and others questioned whether any attempt by Beijing to control information would work in the age of the Internet and satellite.
“I don’t think they can turn the clock back 20 years,” Lardy said.
“Tiny Singapore can implement these kinds of rules effectively. Beijing really can’t--or they’d have to pay such a price to implement them that it won’t be worth it,” said a China analyst with a major U.S. bank.
In any case, foreign investors saw the development as a setback for the free flow of economic news that increasingly has characterized the business climate here in recent years. It also sent a chill through Hong Kong, the British-controlled financial center due to come under Chinese control in 18 months.
“If it means Xinhua [New China News Agency] will control all information about China’s own financial markets, it will kill those markets,” an information consultant who does business in China told Reuters. Under the edict, the foreign news agencies will be banned from acquiring new customers in China until they have applied for permission with the giant state news organ.
The State Council authorized the news agency to act as regulator of foreign financial news services and to collect “subscription rates” from those that are approved to distribute economic information.
The edict bans “government departments of all levels, enterprises and institutions which purchase economic information” from subscribing directly to foreign wire services.
It also warns the foreign news agencies that they “will be punished in accordance with the law if their released information to Chinese users contains anything forbidden by Chinese laws and regulations, or slanders or jeopardizes the national interests of China.”
Some government officials blame detailed coverage by foreign news agencies for the wild fluctuations in many Chinese markets. On Jan. 11, Reuters angered officials when it reported accurately that the Suzhou Commodity Exchange had suspended red bean trading for three days.
Tempest reported from China and Kraul from California.
