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Chinese Impose Strict Controls Over Financial News Agencies

By Steven Mufson
The Washington Post
ZIBO, China

China's State Council ordered foreign economic news agencies Tuesday to submit to control by the Communist Party's New China news agency and threatened to punish them if they release information within the country that "slanders or jeopardizes the national interest of China."

The State Council directed foreign information vendors to register with the New China news agency within three months and it barred Chinese companies and government departments from subscribing directly to economic information from foreign agencies. It also gave the official state news agency the power to set subscription rates for private foreign companies.

The decree was seen by many business people here as further impeding the free flow of information in China and thus dealing a blow to China's efforts to turn cities such as Shanghai into major financial centers, and in Washington the State Department expressed disappointment at the decision.

Business executives interpreted the new policy as an effort by some elements of the government to exercise greater control over the explosion of electronic information services. They also saw it as an attempt by the heavily subsidized New China news agency to reassert its former monopoly power and extract a share of profits from the growing electronic economic news business.

The New China news agency, known here by the Chinese name Xinhua, said the decree aimed to "safeguard the nation's sovereignty, protect the legal rights and interests of domestic users of economic information and promote the healthy development of our country's economic information industry."

The new policy will have an immediate impact on information agencies - including Dow Jones & Co. and Reuters Holdings Plc - which have been selling economic information services around China, primarily to Chinese banks, trading companies and securities firms. The information includes commodity price quotes, stock prices, exchange rates, macroeconomic statistics, and company news as well as more general news services.

"On the face of it, this has extremely serious editorial implications for Reuters as well as for many other organizations active in China," Reuter said in a company statement issued in London.

"We don't know exactly what this means yet, but it's worrisome if it blocks Chinese banks and businesses from having access to information from the outside world because they have to be able to compete in world markets," said James McGregor, chief representative of Dow Jones in Beijing and chairman of the American Chamber of Commerce in China.

"It's also worrisome from the point of view of China getting into the World Trade Organization because it indicates that they are trying to control yet another service industry," McGregor added.

(China is seeking membership in the global organization that attempts to reduce barriers to international commerce. "We are disappointed that the Chinese government has taken what appears to be an action to restrict the amount and type of information available - at least on economic matters - in China," State Department spokesman Nicholas Burns said, Reuter reported.

"We don't believe this decision serves China's long-term interests and we hope that this decision can be re-examined in light of the damage that we believe it will do to Chinese credibility on economic issues and also on the overall economic prospects of China."

Dow Jones reaches many Chinese customers for economic news by selling its Telerate services. It also puts on a popular weekly television show in Shanghai about economics. Other firms that sell economic information here include Reuter; Bloomberg News Service; a Hong Kong-based company called Bartech; and a joint venture involving a Taiwanese company called Insertech and a subsidiary of the well-connected China International Trade and Investment Co.

Business sources said the government called a meeting last week at the Chinese leadership's Zhongnanhai compound with Chinese companies that provide Internet services, ostensibly to discuss controlling pornography over the Internet.

The Chinese government's concerns were heightened by publicity over the recent dispute in which Germany pressured CompuServe to block its subscribers from reaching certain pornographic news groups available on the Internet.

China has long taken a keen interest in controlling news and information, particularly when available inside the country.

But recent advances in computer technology and the Internet have loosened the government's grip on information and undermined Xinhua's monopoly.