China proposes bans on private capital participation in media

The move is the latest salvo in China's broad regulatory crackdown this year on companies in various industries.
The move is the latest salvo in China's broad regulatory crackdown this year on companies in various industries.PHOTO: AFP

BEIJING (BLOOMBERG) - China unveiled a proposal late on Friday (Oct 8), reinforcing its plan to weaken private capital's influence over a wide range of media activities.

Private capital would be barred from news gathering and distribution operations, according to a public consultation paper posted on the website of National Development and Reform Commission, China's top economic planner.

Also off-limits would be private investments in the establishment and operation of news outlets, including news agencies, newspaper publishers and broadcasters. They will also not be permitted to reproduce news content generated by foreign media.

The move is the latest salvo in China's broad regulatory crackdown this year on companies in industries including ride-hailing, e-commerce and after-school tutoring.

The MSCI China Index has sunk 16 per cent this year on concerns about global inflation and interest rates, geopolitical tensions, how the new regulations would reshape businesses and where Beijing might strike next.

The proposed bans are part of a broader document that also touches on entry barriers for various other industries including finance, Internet and agriculture. The seven-day public consultation is scheduled to end on Oct 14.

While it wasn't immediately clear whether the proposed restrictions unveiled on Friday are fresh curbs or incremental rules designed to close loopholes that private investors had exploited, they do signal regulators' intent to step up enforcement.

Private capital would further be banned from live streaming events that may sway political and public opinion, according to the proposal.

That includes those in the realms of politics, the economy, military and foreign policy, and important social, cultural, scientific and sports events.

Other out-of-bounds activities for private capital include operating frequencies and social-media accounts of news organisations, according to the proposal.

Alibaba Group, for one, has invested in newspapers, BuzzFeed-style online outlets, Twitter-like social media platforms and TV production companies. Among those are Hong Kong's English-language newspaper South China Morning Post and mainland Chinese news provider Yicai Media Group. Alibaba's financial technology arm, Ant Group, has a stake in Caixin Media.

Under increasing regulatory scrutiny, the Chinese e-commerce giant recently sought to break a one-year equity lock-up agreement and offload its stakes in Mango Excellent Media, a TV shopping and entertainment network, Mango revealed in a filing last month.

While the restrictions would apply to only domestic investments, Alibaba has been pressed to sell its media assets outside of mainland China, including the South China Morning Post, a person familiar with the matter told Bloomberg in March.