By Hu Zhengrong, Gao Yunhong
I. Chinese media structure and print media ecology
1. Overview of Chinese media
Just like other countries, China’s media sector consists of print media, electric media and new media. Along with the rapid growth of the Chinese economy, China’s media sector also experienced an incredible increase both in scale and capacity in the recent years. By the end of 2005, the total number of China’s newspapers reached 1,931, with 9,468 kinds of magazines (China Journalism Yearbook 2006). Meanwhile, there were 273 radio stations and 302 TV stations at all levels throughout the country. Subscribers to cable television programs and digital cable television services numbered 128 million and 4 million respectively. Radio broadcasting and television broadcasting coverage rates achieved 94.5% and 95.8% of the country’s 1.3 billion population respectively. (China’s Radio & TV Yearbook 2006). For online media, China has got 54.5 million computers access to the Internet, with the total user of 123 million by the end of June, 2006 (China Internet Network Information Center, 2006).

2. Print media ecology
Print media have played an important role in China’s media sector. Despite fierce challenges from electric media, the Internet and other new media, print media still kept remarkable growth in the recent years.

1) Scale of print media in China
During the past more than 50 year after the founding of the People’s Republic of China, the number of Chinese newspapers increased nearly ten times. The year 2005 saw a total of 41.3 billion copies of newspapers and 2.8 billion copies of magazines being issued in China. Meanwhile, more than 222 thousand kinds and nearly 6.5 billion copies of books were published by 573 publishing houses across China in the year. Along with books, China also published nearly 35 thousand kinds of audio and video publications, with the total circulation of 489 million cassettes/discs. The numbers of electronic publications reached 6,152 kinds, with a circulation of over 140 million discs (China Publishers’ Yearbook 2006).

Table 1: China’s Print Media Volumes in 2005
kinds copies
Newspaper 1,931 41.3 billion
Magazine 9,468 2.8 billion
Book 222,473 6.5 billion
A/V publication 34,961 489 million
Electronic publication 6,152 140.1 million
Source: China Publishers’ Yearbook 2006

According to an official survey done by the State Administration of Press and Publication, nearly 1,000 kinds of daily newspapers were issued in China in 2005, ranking the first place in the world. Daily newspapers accounted for nearly half of all newspapers nationwide. Urban newspapers also increased very rapidly in the recent years (China Annual Report on Newspaper Development 2005). At present, some 39 newspaper groups such as Beijing Daily Newspaper Group, Wenhui Xinmin Associated Newspaper Group and Guangzhou Daily Newspaper Group have been organized.

2) Changes with print media
Print media have been one of the most rapidly developing industries in China. Since 1990, print media have undergone three growth periods – 1990 to 1993, 1994 to 1999 and 2000 to 2004. The third growth period witnessed the most tremendous increase, and daily newspapers appeared a tendency of sharp increase. A total of 955 kinds of daily newspapers were published in 2004. It covered 49.7% of the overall volume of newspapers nationwide in that year, nearly 30% more than that of the year 1990. Evening papers also boosted in the third period of newspaper growth. Urban evening papers accounted for 14.8% of all newspapers in China in 2004, and were main players of the newspaper sales and advertising market. With the elevation of people’s consuming capacity, newspapers and magazines providing information and services for people’s daily life became abundant in the market these years. Beijing-based Life Style (《精品购物指南》), Shanghai Times (《申江服务导报》), Tianjin-based Holiday 100 (《假日100天》)and Modern Weekly (《周末画报》) in south China’s Guangzhou city all made a hit in the market. Professional newspapers and magazines for specific industries and sectors also participated into market competition by re-positioning themselves to meet the market’s demands. Meanwhile, print media market began to be opened to non-state investors, private investors and international investors in dealing with retailing and wholesaling business.
China has engaged into profound reform on print media since 2003. Political power withdrew from the operation and distribution of print media. Market mechanism was introduced into the sector, and newspaper and magazines adjusted themselves to participate in market competitions. In January, 1996, the first newspaper group, “Guangzhou Daily Newspaper Group,” was established, suggesting that China’s print media had entered a new era of economic scope. Trans-regional cooperation among the print media has become a new trend since 2003. The Beijing News (《新京报》), invested and run by Guangming Daily Newspaper Group and Southern Daily Newspaper Group, was the first one approved formally by the government to publish trans-regionally. Orient-Observation Weekly came out at the end of 2003 in Shanghai in which the biggest shareholder is the Xinhua News Agency headquartered in Beijing. In December, 2004, Beijing Youth listed in Hong Kong Stock Exchange, which expanded the way of print media’s financing measures and pushed forward the capitalization process of print media. After that, several other print media also began to making plan to enter stock market.

3) Difficulties for print media
With the dramatic changes, print media in China are also faced with difficulties. Institutional transition pushed print media into the market to join in market competitions in the process of conglomeration. However, the conglomeration of China’s print media raised suspicions regarding its purpose and effect. In contradistinction to Western countries, political purposes rather than economic intentions drove the conglomeration of China’s media. Unable to break through the long established structure of political and economic power, the conglomeration was not an entirely complete one. Cross-regional and cross-media groups are infrequent in China under the current political and industrial structures. Meanwhile, the rise of new media has led to a dispersion of advertising revenue and more fragmented audiences, affecting the country’s print media. In 2004, for example, advertising revenue declined at the Beijing Youth, one of the country’s largest newspapers. It is the first time that advertising has dropped since newspapers began accepting advertisements decade ago.

3. Journalism in China
1) Evolution
China’s journalism history could be traced back to Di Bao, a kind of news bulletin in the imperial court of the Tang Dynasty more than a thousand years ago. Despite the long history of journalism, China started its modern practice and education in journalism just in the 1920s, under the influence of American journalism system. After the establishment of the People’s Republic of China in 1949, China adopted more journalism principles from the Soviet Union. Marxist-Leninist theories were added and the Soviet model replaced the American model in journalism. The target of the journalism education in China was modified to “training of news writing personnel with solid political foundation and potential”. This reflected the single purpose of political orientation of the media at the time.
During several decades of development, China has modified its journalism practice and educational system and adapted to the different needs in its different development periods in the modern history of China. This can be seen as a consistent process of localization of Journalism in China. Since 1978 when China’s reform and opening-up policy stimulated great social changes and rapid economic growth, China has established its socialism journalism with distinguished Chinese characters. Increased western journalism theories have been introduced to the Chinese journalism system, which has been expanded greatly and become more diversified to meet the increasing demands of media. Meanwhile in late-1970s and 1980s, communication and media study theories began to be introduced to China as a new branch of science in the country. Renmin University of China, Fudan University, Beijing Broadcasting Institute (predecessor of Communication University of China), as well as Chinese Academy of Social Sciences, became the pioneers of introducing and teaching communication and media study theories, with preliminary researches as well, in China.

2) Journalism system with Chinese characters
China’s journalism system has distinguished Chinese characteristics. According to China’s journalism theory principles, with both party nature and people nature, media in China are regarded as mouthpiece of the Communist Party of China and the Chinese people, under the guidance of socialism guiding ideology such as Marxism, Mao Zedong Thought, Deng Xiaoping Theory and Jiang Zemin’s Three Represents Theory. Chinese media are also seen as political propaganda tools, with the function of providing “guidance of public opinion” to bring the public opinions in line with the Party spirit. Similar to the West, Chinese journalism theory also comprises some basic elements of journalism. It defines news as reports on newly-happened facts, with news values of timeliness, significance, prominence, proximity and human interest. Chinese journalism theory also emphasizes news authenticity and objectivity, regarding the truthfulness of news, eyewitness accounts of events, corroboration of facts with multiple sources and reporting without bias. In line with media reforms, freedom of press has been endowed with greater importance. Supervision on the government became an important component of news freedom.

3) Journalism education and research
The rapid media developments have left the sector in great demand of more professional and qualified journalists and editors. Many colleges and universities in China have established journalism and communication-related majors, such as journalism, broadcasting journalism, communication study, editing and publication, hosting, advertising, public relations, media management and so on. The increase of journalism student enrollment is to meet the greater demand of not only traditional reporters and editors but also more diversified and special training for the new recruitment.
By 2006, a total of 229 colleges and universities have established journalism major and 158 have established broadcasting major throughout China to enroll undergraduate students. 22 colleges and universities have major of communication study. Advertising major appears in 262 colleges and universities, while hundreds of colleges and universities have other media-related majors for undergraduate students. Meanwhile, ten universities and scientific research institutions have the authority to offer Ph.D. degrees in journalism and communication study. Universities and scientific research institutions which have the authority to offer masters’ degree in journalism reached 66, while 75 have the authority to offer masters’ degree in communication study (China’s Radio & TV Yearbook 2006).
China’s journalism and communication researches are highly polarized. On the one hand, a great number of researches are practice-oriented, having close ties with the journalism outlets. They emphasize journalism operation other than theory and many of the researches are conducted in the journalism practice process. On the other hand, there are also many researches which are media and communication study-oriented. They have loose connection with journalism practice and concern more about theory. But generally speaking, the researches are diversified to cope with the development of China’s media sector.

4) Problems with journalism
Despite the rapid development of Chinese media, there are still problems with China’s journalism system. The first problem is the contradictions between established journalism value system and journalism practice. Some of the journalism values such as news significance are in the current journalism practice, but some others are not smoothly observed and implemented，faced with the challenge of marketization. The second problem concerns the contradictions between professionalism and journalism reality. Professionalism demands responsibility and fairness in news reporting, but in the journalism practice, some are going after profit, which is a great restriction against social fairness. The third problem regards the long-standing contradictions between research and practice. Some researches concern more about their interest in traditional ideological journalism, which have fewer relations with the rapid change of the journalism practice; while other researches pay more attention to westernized theories, which go far away from the Chinese reality. Some incisive issues raised by the journalism practice, such as freedom of speech, regulation and marketization, are rarely involved in the researches.

II. Media market and its changes
China has witnessed breathtaking changes in the media sector during the past half of a century. With the economic development that started in the 1980s, Chinese media have become more diversified as they extend their reach throughout China by multiple means.

1. Media market
China’s media sector is growing in scale and diversity in response to the rapid economic growth. A diversified media market has appeared to meet the increasing demands of the audience. In the next few years, China’s media market will witness more competitive circumstances, with different tendencies of development for different branches of media in China.

1) Radio
Localization and specialization has become the trend of development of radio broadcasting in China, concerning the characters of radio communication. Besides China National Radio (CNR), China’s national broadcasting station, and China Radio International (CRI), the nation’s only overseas broadcasting station, every province, autonomous region and municipality has local broadcasting stations, providing programs with distinct local characteristics of different regions in the country. Meanwhile, radio stations at all levels have become increasingly specified, targeted and personalized. Based on the concept of “narrow casting,” they offer the audience various special programs of news, current affairs, remarks, economy, culture and technology, entertainment and so on.

2) Television
Competition in the television branch has been growingly fierce since the total number of TV channels rockets up to over 2,000 across the country. To win the competition, TV stations of all levels tend to adopt the strategy of specialization to attract specific audience with specialized TV channels, as a result of “segmented audience” currently. However, the process of specialization remains incomplete, and many TV channels throughout the country still look identical, some of them are repetitive in content, but not real specialized channels. Meanwhile, since 2003, digital television has been a key mission in developing the television industry in China. The process of digitalization enables the current cable network to become a universal platform for delivering new products and services. The State Administration of Radio, Film and Television (SARFT) is pushing forward the effort of the transition from analogue television to digital pay TV.

3) Newspaper
Due to the increasing amount of advertisement and the expansion and subdivision of contents, newspapers have become thicker and thicker these years. Comprehensive newspapers are providing diversified and fragmented information to attract larger scale of readers. Readers, however, choose less to read in thicker newspapers. Meanwhile, professional newspapers have made tremendous progress with abundant and in-depth information and services. Intense competition and liberalization of newspaper branch has driven the consolidation of dozens of newspaper groups.

4) Magazine
Magazines, similar to newspapers, are in a tendency of fragmentation and diversification. The magazine branch is also in a stepping-up process of globalization. International media groups have started to enter china’s magazine market by investing China’s magazines and holding joint ventures with Chinese enterprises. A typical example of the kind is the “Trends Cosmopolitan” series magazines, cooperative products between Trends Group and Hearst Group of the United States, which have possessed sharp increase of market share during the past decade with a big circulation.

5) Online media
Online media have got enormous development in China these years. There is a large market of online information and broadband services in China thanks to the rapidly increased of Internet users. At present, online media have become more and more popular and have attracted increasing mainstream audience. Besides hundreds of websites which are legally able to publish and reprint news, over 1,000 news outlets of traditional media have gone online. Due to more flexible policies on Internet compared with traditional media, private companies have played an important role in the Internet market. The government encourages domestic and overseas investment and the liberalization of the market.

2. Audience
Thanks to technological developments and media policies initiated by the government, Chinese audience has got more choices from media. Since media becoming more market-oriented, Chinese audience experienced a process of segmentation and further subdivision. There have been four stages in the course of audience’s change: the masses, segmented audience, niche audience and one-to-one audience. The masses are audience in the era of media and information shortage. They have few choices and their media contact is limited by the inadequacy of media development. In the second stage when media increasing in number and scale and being more diversified, audience are segmented and media provide diverse contents for the segmented audience. In the third stage, audiences are further subdivided into niche audience as the media sector enjoys further enrichment. Different media try to develop its own identity and establish its own “niche.” As the subdivision of audience reaches the utmost period, the era of one-to-one audience comes.
Meanwhile, besides more choices for audiences, audiences have also begun to play an active role in choosing media contents instead of passively receiving, and audience participation has also increased in a large amount. Active audience participation in both traditional media and new media leads to a change of media format as well as communication methods.

3. Content
Despite the booming media market, a shortage of content still remains a serious problem. Amid the rapid increase of number and scale, the shortage of content is becoming a bottleneck for media, especially electric media and new media. The fragmentation of audience demands media’s higher professional skills, ability and speed to produce new products. However, despite the forming of a diversified media market which leads to the enhancement of competition and the specialization of media, contents of different media are repeating and overlapping one another and media content in general are undiversified. Reasons of the shortage of media content in China lie in a huge audience population, incompetence of domestic media content production and low market concentration in a vast territory.
While content development remains a major unmet need, it is also one of the hardest areas for outside investors to break into. While the government still tries to keep control of the media sector, it begins to open content production, which is the “upstream” of the media value chain, to private and international enterprises to diversify media contents. “The Provisional Regulations on the Administration of China-Foreign Joint Venture and Cooperation Radio and Television Production and Distribution Enterprises,” jointly issued by the State Administration of Radio, Film and Television (SARFT) and the Ministry of Commerce (MOFCOM) in 2004, permitted foreign television enterprises to establish Sino-foreign film and television production joint ventures in China, with the Chinese partner holding no less than 51% of its ownership. The move was seen as an important signal to further open the media content production branch in the process of media transition.

4. Three stages of media transition in China
China’s media has gone through three distinct stages of transition in terms of the feature and extent of commercialization. The three stages are known as marketization, conglomeration and capitalization.

1) Marketization
Marketization started in the early 1980s, and was characterized as “Single System, Dual Operations” (the single system refers to the state ownership and the dual operations are seen as a unique approach to commercialize China’s media while fulfilling the political tasks). Loosening policy allowed parts of media content to be less ideological, more entertaining and closer to daily life. Chinese media became more and more financially independent. The government decreased financial support for all media, so all media had to survive economically in the market, primarily by making profits from advertising and running other businesses. It is during the period from the early 1980s to the mid-1990s that Chinese media industries experienced their fastest development, featuring an increasing number of media outlets, the growth of the scale of media industries, the accumulation of assets, the dramatic rise of advertising revenues and the incrementally severe competition among media industries. But Chinese media industries also encountered a bottleneck, which was the lack of a rationalized industrial structure and institutional arrangements. As the size of the media market was in a state of expansion, the increasing awareness of ideological control became so serious that economic infiltration was deepened.

2) Conglomeration
The second stage, starting from mid-1990s, is the phase of conglomeration, and the conglomeration process of Chinese media was pushed by the government but not by media themselves. The proposal to conglomerate media resulted from the co-influence of internal factors such as domestic media industry development and external factors such as international interests as well as non-media industries’ interests. With regard to internal factors, political groups were the main power pushing for conglomeration. The priority for political groups is to strengthen the political control in the context of increasing marketization of media. The direct reason for conglomeration is that it is necessary to consolidate social resources and strengthen the mainstream and central media through merging less competitive media so as to alter the situation of “big scale with weak capabilities.” As for the external factors, China is faced with new international political and economic structure in the process of globalization. The wave of acquisitions, mergers, convergence, and concentration which has been going on in the Western Europe and North America since the mid-1990s also brought a deep shock to the dispersed and fledgling media industries in China. With the purpose of ensuring the long-term interests of the political groups rooted in media industries, the Chinese government has to keep adjusting its strategies to face the possible attacks of globalization. These included policy shifts, administrative measures and methods of control or fundamental institutional re-arrangements.
The process of conglomeration started in 1996. In January 1996, the first newspaper group “Guangzhou Daily Newspaper Group” was established, suggesting that China’s media had entered a new era of economic scope. Two other media groups, Southern Daily and Yangcheng Evening Daily Newspaper Groups, were established in 1998. As for broadcasting media, conglomeration process was also undertaken in full swing by forming dozens of radio and TV groups.
However, the conglomeration of China’s media raised suspicions regarding its purpose and effect. In contradistinction to Western countries, political purposes rather than economic intentions drove the conglomeration of China’s media. Despite superficial resemblances, there are great, or even fundamental, differences between conglomeration process launched in China and that in the western media sector. Since 1980s, conglomeration has been a main tendency of the transformation of radio and TV sectors in Western developed countries. International media companies adjusted their development strategy. By capital operations such as market annexation and purchase and with the goal of profit maximization, they established comprehensive and multiplex media groups, which prove to be highly competitive and influential domestically and even around the world. This is because, in the relatively mature market economy in the Western countries, the scale of groups plays the extremely vital role in market competition. In Western developed countries, media annexation and purchase fulfilled in the market, similar to that in other sectors, is safeguarded and restricted by economic laws and regulations, such as the Company Law and Anti-trust Law. These powerful safeguard mechanisms and restriction measures ensure necessary intervention and limitation on the problems which are possible to appear in the media sector, such as over-concentration of property rights, so as to protect the equal competition of market players in the development of media sector and push forward healthy transition of the media industry. However, conglomeration process in China’s media sector is not operated under a market mechanism. Instead, it is by powerful administrative means and has been pushed by governments. Meanwhile, all of the steps like organizational structure, human resources allocation, etc. have been fulfilled under the order of governments. The primary and ultimate objective of the “conglomeration” is to strengthen government’s control over media. Unable to break through the long established structure of political and economic power, the conglomeration has not got entire completion. Take broadcasting groups as an example, the largest broadcasting group, China Media Group, was disbanded in June 2005, and some other broadcasting groups have been asked to change to be pure enterprises, without affiliated radio and television stations. Chinese media reform follows the direction of “conglomeration”, but in practice it gradually drifted apart from the direction.

3) Capitalization
The third stage, capitalization, started from 2001 and sped up since 2003. The capitalization process was known as a process of re-institutionalization, during which intermingled forces strengthened their control of the media and maximized their profits. Multi-financing resources, including non-media and non-state investment and international capital, began to have more and more chances to be involved into the media sector. Meanwhile, political powers have managed to find some opportunity to cooperate with capital interests groups.
Through the process, the power of capital gradually becomes the main driving force for media restructuring while integrating tightly with the political power. Political power also hopes to make full use of the power of capital to diversify its governance and further strengthen control in the context of globalization. Meanwhile, capital power can result in more abundant profits under the political umbrella by supporting and integrating political power.
As one of the driving forces of encouraging the capitalization process, the central government pushes capitalization by making more open and capital-friendly policies. The central government modifies and adjusts its media policies to reduce potential conflicts and strengthen and sustain its legitimate political control. Domestic enterprises, as well as international media groups, are increasingly showing their interest in investing in China’s media sector. The government has already opened some arenas of media investment to them, although with lots of limitations. Meanwhile, the government has paved the way for more outside investment by allowing media enterprises, such as the Beijing Gehua Cable Network, to be listed on the stock exchange.
Some newly developed economic powers are the most eager to push forward capitalization and de-politicization of media industries in China. They view media industries as one of several yet-to-be-capitalized industries and they also find huge opportunities existing to make profits in media industries. Many of big state-owned and private companies, and securities and investment companies from China and abroad have expanded their investments and businesses into the newly developed and highly commercial media market.

III. Media policy and cultural system reform
1. Media ownership
Media in China are not companies or corporations, but stated-owned organizations, with the financial support of advertising. All Chinese media can be seen as political collaborators, but at the same time they are market competitors. Media outlets are not affiliated, but independent from each other. All media in China have to be financially supported by advertising. Advertising income runs some 90% of their total income, while government subsidies just contribute a small amount to the revenue of Chinese media.
Media in China have at least three functions. First, the state-ownership legitimates the political function of Chinese media. They are seen as mouthpiece of the government to carry out propaganda. Second, as Chinese media are commercially supported, they must survive in market competition by attracting advertisements, and ratings and circulations become the critical factors for all media in China. And third, Chinese media are public as well, and they also have to carry some educational and informational contents to fulfill the public function.
In August, 2001, the Publicity Department of the CPC Central Committee, the State Administration of Radio, Film and Television (SARFT), and the State Administration of Press and Publication (SAPP) jointly issued decree No.17, “On the Strengthening of the Reform of Press, Publishing, Radio, Film and TV Industry.” The decree regulates that all media outlets in China have been owned by the Communist Party of China and government authorities are regulatory bodies on behalf of the Party.
In July, 2003, “Proposal about Trial Reform on Cultural Mechanism,” known as decree No.21, was issued jointly by the Publicity Department of CPC Central Committee, Ministry of Culture, the SARFT and the SAPP. The document proposed a trial reform indicating that the restructuring of China’s media sector had entered a new era. The principal act of this reform focused on dividing the media sector into two parts, known as public service units and business units, according to ideological attributes. Accordingly, the system of state ownership was to apply to key media outlets such as the party-run newspapers, magazines, radio and television stations, as well as key publishers. Then, as to “non-propaganda” resources such as advertising, printing and distribution, they were to be controlled by enterprises. Enterprising recourses such as social service, entertainment and publishing of special newspapers and magazines are split from established public system. These resources are restructured in accordance to modern ownership and enterprising system, separating ownership from enterprising management, therefore, promoting the regional or cross-regional convergence. The core concept of the reform is to categorize media outlets according to the level of ideology. The reform locates public service outlets in ideological area while business outlets into the market.
The policy change allowed business bodies of all types of ownership to play a role in media operation with the exception of news propaganda. “Regulation on Administration of Publishing Market” officially implemented in 2003 admitted for the first time the ownership of the distribution of newspapers and magazines by non-state-owned enterprises. In the same year, the State Administration of Press and Publication brought to stage a new regulation, exercising the administration of party-run and locally-owned newspapers and magazines. Measures are taken to separate the administration and operation, abolish mandatory allocation, and bring a halt to city or county-run newspapers. The measures give an impetus to the development of market mechanism of print media and effective integration of resources.
From the point on, a variety of other innovative reforms on media institutions and policies, have been undertaken in order to provide a favorable environment for media’s development. In 2004, media in China launched ownership reform, with some media starting to go into the stock market to gain financial support. In 2005, the government began to plan for new merging trends of various government organizations to allow greater efficiency in the implementation of regulatory aims to protect media pluralism. Wider access to different sources of investment, both private and foreign, has been permitted. Some big movements concerning ownership reforms have taken place, such as music radio networks, whose ownership is no longer monopolized by the Chinese government.

2. Media structure
1) Vertical structure
Chinese Media are not network-structured, but correspond with the party and government structures. In China, media are vertically in a four-tier structure, corresponding to the nation’s four-level party and government system: the central, provincial, city and county level.
The first level refers to the dominant national media, which are owned by the central government and exert a powerful influence. These media include central party newspapers and magazines, China Central Television (CCTV), China National Radio and China Radio International. The second level of media refers to provincial media, run by more than 30 provincial governments. They are independent from the central media, publishing their own print press and producing and broadcasting their own TV and radio programs. The third level of media is the city level, under the leadership of municipal governments. There are hundreds of cities around China at the level. Media at city level have profound impact on the daily life of people, because they are so close to their audiences. They report regional and local news and provide useful information to people living in the area. The fourth level, the county level, is widespread in the vast rural areas under the leadership of county governments across the country. More than half of China’s rural areas are still underdeveloped. Although there is a huge number of media at this level, they are not the main part of China’s media system. Print media at the level are simply arranged, with a small circulation. As for rural TV stations, they normally just transmit and replay the programs from the three levels above. The four-tier structure of Chinese media has doubtlessly resulted in regional protectionism and blocked cross-regional media cooperation, which hindered the healthy development of the media sector.
In 1999, the Ministry of Information Industry and the State Administration of Radio, Film and Television (SARFT) jointly issued “Notice about Further Administration of Broadcasting Cable Networks,” merging the four-tier media system into a two-tier system. It demanded broadcasting outlets be reduced by closing some stations at city and county levels. All of these stations are asked to transmit the programs from central and provincial level stations rather than producing their own programs. The policy was seen as a sign of new trend of reform of the Chinese media structure.
However, these measures were still based on administrative regions, and the actual execution was far from satisfactory. The implementation of the new policy has been challenged since by counter forces from the municipal and county governments, especially those in economically developed areas in China. They postponed carrying out the policy in the name of political propaganda. But the real reason behind this delay is that those local radio and television stations have been established, financed and operated by the local governments for years, and these governments have also gained a vested interest in the stations. If the local broadcasting outlets are closed or reduced to just transmitting programs, it means both the prior investment in stations the local governments have made and future possible interests those governments could have gained would have rendered up to the government at the central and provincial levels.

2) Horizontal structure
Besides the four-tier vertical structure, Chinese media also have a horizontal structure. Different government organizations oversee different media branches.
Culture industry in China can be divided into several parts which different government organizations are in charge of. The State Administration of Radio, Film and Television, known as the SARFT, is in charge of broadcasting media; State Administration Of Press and Publication, known as SAPP, oversees all print media, including newspapers, magazines and other forms of publications; Ministry of Culture is in charge of art and entertainment; Ministry of Information Industry manages telecom sector; and the State Council’s Information Office regulates and supervises online media and the Internet.

Table 2: Horizontal Structure of China’s Media Sector

However, the horizontal structure leads to a contradictory situation in China among different government administrations and various media branches by setting administrative rampart. For example, a company looking to develop an entertainment program that would also be available on the Internet would need to consult three separate government organizations as well as get approval from offices at four different geographic levels. It is doubtlessly an unwieldy system for cross-media and cross-regional media operations, and is the contradiction resulting from the frictions of various government authorities in order to maintain their own powers and interests.

3. Cultural System Reform
The latest changes of media institution and policy in China reveal that the Chinese government is putting the whole media sectors into the country’s cultural system. So the latest changes of the overall media institution and policy are involved into China’s cultural system reform. Cultural system in China not only covers the broad sense of media sector, including newspaper, magazine, publication, radio, film, television, online media and the Internet, but also involves art, entertainment and other kinds of cultural forms, products, performances, services, and so on. It manages the cultural construction in all aspects in the country.
The 16th CPC National Congress in November, 2002 put emphasis in its issued report, which was regarded as the guidance to China’s political, economic, and social development in the following five years, on the necessity of pushing forward the restructuring of China’s cultural system and the development of the cultural industry. The report, for the first time, divided the cultural system into two parts, cultural undertakings and industry, and set down the direction and overall objects of cultural system reform. According to the report, the reform would also focus on straightening out the relationship between the government and cultural outlets and enterprises.
In the following year, the decision approved at the 3rd Plenary Session of the 16th CPC Central Committee outlined the reform of cultural system in the country. The decision raised different objectives for cultural undertakings and cultural industry, with cultural undertakings focusing on public service and cultural industry highlighting market-orientation. According to the decision, the reform aims to improve the management system of government units under the guideline of separating government from public service units, to maximize the fundamental role of the market in allocating the resources, and to perfect the functions of the government in social and public service management. The decision also encouraged multiple channels of financial resources and the establishment of a number of large enterprise groups for the cultural industry.
In line with the country’s general policy over cultural system reform, government administrative organizations specifically in charge of the cultural system also launched a number of regulations to push forward the reform, especially for the media sector. “On the Strengthening of the Reform of Press, Publishing, Radio, Film and TV Industry,” known as the decree 17 which was jointly issued by the Publicity Department of the CPC Central Committee, the SARFT and the SAPP in 2001 as mentioned above, was seen as an important document to deepen the reform. The document put forward structural adjustments and the undertaking of full-scaled structural adjustments of organization, business, products, market, human resources, knowledge and capital in the media sector. It also stressed the capital and market orientation of the media industry by constructing cross-media and cross-regional conglomerates to break through the conventional structure governed by different level of authorities. Meanwhile, media conglomerates are allowed to collect capitals within the press, publishing, radio, film and TV system by exercising financing, bank loans, and share holding. Under the circumstance of state-share-dominance stocking, the reform of joint stock on radio and TV transmission network, the production of TV dramas, and the distribution of books were allowed to absorb foreign capitals as well as domestic non-state-owned funding.
The document reflects several changes of media policy in the process of cultural system reform. First, the function of the government has changed from a market player to a policy and regulation maker and supervisor. Second, media outlets have shifted their status from affiliated organization to market players, becoming independent judicial bodies, and enjoying relative autonomy of economic activities such as capital management and structural adjustment. Third, the government further undermines the interference into media economic activities.
In July, 2003, “Proposal about Trial Reform on Cultural Mechanism” issued jointly by the Publicity Department of the CPC Central Committee, the Ministry of Culture, the SARFT and the SAPP, know as Decree No. 21 as mentioned above, became a milestone of cultural system reform in China, with the separation of the public service and business units and the capitalization of operational resources in all respects becoming the main focus. The most significant change in the document is, as mentioned above, the separation of public service units and business units of the media sector, according to the level of ideology. In compliance with the document, public service units refer to media outlets conducting news, current affairs and political information producing, distributing and broadcasting as well, and also involve media outlets dealing with educational contents. Business units, meanwhile, cover a wide range of media companies and enterprises dealing in production, distribution, transmission network, advertising business, entertainment, music, movie and TV drama, sports, lifestyle, science and so on. The business units also involve new media providing IPTV and Mobile TV services. The change is noticeable that it allows businesses access to all forms of ownership to participate in a range of media activities with the exception of news coverage.
The reform focuses on attracting more investment, transforming mechanisms, vitalizing business and improving the quality of media service. Main points of the reform can be summarized as follows. First, the separation of media sector into public service units and business units is according to ideological level, and ideological attributes become the division of the two parts. Second, the reform encourages diversifying financial resources of media, such as being listed at stock market. Media groups and companies such as Beijing Youth Daily Group and Beijing Gehua Cable Network which have been listed at stock market are benefited from the reform policy. Third, the reform makes it possible to lower market barriers legalizing more international and domestic investment into the media sector. International and domestic non-state investors are encouraged to be involved into production and distribution companies, cinema chains, cable network digitalization, channel lease, as well as outsourcing. In practice, however, they are still facing some restrictions due to the immaturity of the policy and the protection from the government on state-owned assets. Fourth, the reform also urges to merge various government authorities relating to the sector to launch consolidated administrations over the whole cultural system. The mergence has started at city and county levels since 2005 over government authorities regulating radio, film and television, newspaper, magazine and publication, art and entertainment, and even sports in some area. More merging efforts are expected at higher levels such as provincial level or even the central level around 2008 as scheduled. Fifth, the reform aims at separating functions of the government, media outlets and media companies in the next few years. The government is to play as regulator and administrator to make strategic plans over the whole sector. Media outlets are confined as public service units to conduct news, information and education content service and broadcasting, while media companies are operating as business units dealing in production, distribution, new media business and multiple businesses.
The policy adopted in this reform is remarkably different from the previous ones. Firstly, it is an institutional innovation, a systematic restructuring, but not fragmentary reparation. Secondly, it breaks through the monolithic state planning system, emphasizing instead, the coexistence of the public service and business outlets. Finally, the reform has exerted its influence into the entire cultural industry and other government units, laying a good foundation for cross-business media convergence. The new policy acts as an accelerant for opening up of the market and the stimulation of economic activities. It is regarded as institutional innovation and transformation of mechanisms in the media sector.
However, the reform still leads to some questions. For one thing, it is hard to set up the standard to categorize, while ideology is employed in all performance of media, and it is irrational to assume that non-propaganda resources are not liable to ideological problems. At the same time, business operation and commercialization are basic attributes of the media industry. Therefore, it is hard to imagine how news propaganda organizations, apparently public service units, manage to survive the market of economy. With regard to a state-owned media outlet, public service and business management are its internal affairs, and the absence of business recourses will lead to the insufficiency of self-reliance. But if the media earns a living by throwing itself into the competitive market, will its behavior be differentiated from other enterprises? The standard, therefore, is too simple and self-contradictory. It is by no means scientific and applicable. For another, the question is how to define public service units. The strenuous effort in putting party-run newspapers and magazines and other political propaganda resources into public service units implies that the ideological influence of the Party is equivalent to that of public-favored undertakings, the result of which, however, is the absence of public service because it lacks public-run media organizations independent from the government and business forces such as BBC in Britain and PSB in America. In addition, there is also question about the complete competition. Media policies in nature should encourage competition to safeguard public interests and diverse media products. However, this reform as the previous ones, continually accentuates the power of state-owned media outlets so as to ensure the sustainable political support from the Party, thus turning the traditional monopoly to a new one under which the market fails to play its roles and the competition is incomplete.
The crucial part of media reform lies in the alteration of market rules whereas the policy is the agenda of rules set by the government. The policy, in essence, is the output of an institution, that is to say, the outcome of institutional arrangement. The origin of the above problems, therefore, is that the policy-makers have not been emancipated from the concept of state planning economy, which results in the inability to set an institutional agenda under the system of market economy. So, the critical concern of media reform is the transformation of media policy on the ground of institutional innovation.
As for the latest development, cultural system reform was carried out in an all-round way in 2006, following the latest document jointly issued by the CPC Central Committee and the State Council at the beginning of the year. The document urged the deepening of structural reform of the cultural system. It requires general art troupes, publishing houses, newspapers and magazines on culture, art, life and popular science, bookstores, movie studios, theaters, TV play producers, cultural intermediary organizations to gradually turn into market-oriented businesses. Only a few very important cultural units will continue to enjoy state support according to the document. The document also stresses changing the ownership structure of the cultural system to gradually form a pattern “with public ownership as the mainstay and various forms of ownership developing side by side.” It noted that private capital approved by the government is encouraged to enter cultural sectors in various forms.

To sum up, China’s media sector has been for a long time under a strict control and supervision system, with the media’s role as propaganda tools. Since China’s media faced increasingly competitive market situation, the way of control and supervision of media has been changed a lot. The gradual maturity of the market system in China has provided fertile ground for media growth, and market mechanism has played an important role in the operation of the media sector. The rise of market-orientated media has made the field more diversified and competitive. Re-regulation and deregulation have been keywords of media policy changes. However, there are still political and social constraints, which undermine the full development of the market-driven model. Chinese media sector is on the key point of deep transformation. Domestic private investment and international investment have been allowed to enter different sections of media practice such as program production and distribution. The media sector of China is preparing an important adjustment. A promising feature lies in the wider access to different sources of investment, both overseas and non-state. Some big movements concerning ownership reforms have taken place.
Chinese media policy and institutional transition is a non-linear transition process, which is affected by a lot of influential factors. The economic changes which resulted from China’s reform and opening-up policies provided an environment for social transformation. China’s policy towards media has been adjusted in line with the media reform. The restructuring of Chinese media sector is facing internal domestic circumstances besides the external changes of environment and opportunities. China has increased the pace of media sector restructuring since its entry into the WTO in 2001 in order to meet challenges from international media enterprises.
The change of China’s media policy and institution heavily depends on social institutions transformation. In China, all media policies and institutional transformation totally depend on political system change, which plays a role of basic factor of the media policy reform. The government is changing its functions as the result of Chinese governmental structural transitions in the past few years. The transformation of Chinese society over the last quarter of century, particularly in the last decade, has been accompanied by a legitimization of the importance of the market in economic and social life within context of the existing political system, along with a gradual integration into the global economy. This has had a huge impact on the mass media in China.
The critical concern of Chinese media reform is the transformation of media policy on the ground of institutional innovations. The government concerns more about how to balance the party ideology and commercial values. The government has to consolidate the leading role of the party by strengthening its ideological administration of media, to develop state-owned mainstream media to obtain the continual political support from the Party, and to speed up the pace of commercialization by applying market mechanism to the development of media capacity. Aim of the transition is to keep balance between control and openness over media by the government and to find equilibrium among politics, economy and society.
About the Author
Dr. Hu Zhengrong， Communication professor at the Communication University of China.
Gao Yunhong, MA student at School of Journalism and Communication, Communication University of China