October 13, 2021


CHINA: “Negative list” may force private capital to divest from news media

BY Gabriel Wildau

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  • China’s state planning agency updated its Market Entry Negative List with what appear to be tighter restrictions on private investment in news media and internet livestreaming.
  • The Negative List is not new policy, but annual changes to the list can signal shifts to Beijing’s enforcement priorities or its interpretation of existing laws, regulations, and Srate Council guidance.
  • Privately-owned companies like Alibaba, Tencent, Sina, and ByteDance could be subject to tighter regulation or forced divestment, but it is unclear if the updated list will be applied to existing investments or only to new market entrants.

The National Development and Reform Commission N(DRC) published its annual Market Entry Negative List as a draft for public comment on 8 October. Like previous versions, the list is divided into two sections: industry sectors where private investment is prohibited and those where private investment is permitted subject to government approval. Sectors not included on either sub- list are freely investible without prior approval.

The 2021 list includes new language that appears to tighten restrictions on private investment in news media, livestreaming, and other politically sensitive internet content. Depending on how the list is enforced, privately- owned companies like Alibaba, Tencent, Sina, and ByteDance that operate news portals or livestreaming platforms, or hold stakes in online and offline news outlets, could see themselves subject to tighter regulation or forced divestment.

Strictly speaking, the Negative List is not new policy. Rather, the list serves as a compilation of existing laws, regulations, and administrative guidance from the State Council and various agencies. For each of the newly worded prohibitions in the 2021 list, one can identify rules of which the new NRDC language is a plausible interpretation. Nevertheless, in annual updates to the Negative List, the NDRC sometimes changes the language used to describe those preexisting rules or adds new references to prior rules not explicitly referenced in the previous versions. These changes may signal shifts to Beijing’s enforcement priorities or its interpretation of existing rules.

The stronger language on media ownership in the 2021 draft list fits with broader political and regulatory trends, notably the crackdown on privately- owned tech companies and a focus on controlling the “disorderly expansion of capital” into areas where the state sector should lead. But the practical impact, if any, is hard to predict. It is possible the new list will mainly govern future market entrants but not applied retroactively to existing private investors in media.

The draft 2021 list states unambiguously that “non-public capital must not engage in news collection, editing, broadcasting or transmission” and that “non-public capital must not invest in, establish, or operate news organizations.” This language appears to strengthen longstanding restrictions but is not unprecedented. The 2020 list similarly stated that “non-public capital must not get involved in internet news and information collection and editing business.”

In recent days, Ant Group reportedly sold off its minority stake in Caixin, China’s most respected independent-leaning media outlet. But this sale may not be directly related to the Negative List. As far back as March, regulators reportedly instructed Alibaba and Ant to sell off media assets due to concerns that the company exerted too much control over public opinion. Still, the new rules cast doubt on the fates of other non-state investors in Caixin and in other media outlets. China Media Capital, a privately-owned media conglomerate, is reportedly still Caixin’s largest shareholder with a stake of at least 40%. Tencent also holds a 5% stake, and both Alibaba and Tencent are also shareholders in CMC.

Beyond newsgathering organizations, privately-owned news portals are also at risk. Tencent, ByteDance, and Sina are among the technology companies that operate websites and apps that aggregate stories, links, and headlines from licensed news organizations into a single interface. Sometimes portal editors also publish articles composed of excerpts or paraphrased content summaries of articles from news organizations, blurring the line between aggregation and original content (not to mention plagiarism).

The 2021 Negative List also includes a new provision banning private capital from operating internet livestreams that include any content on politics, economics, military affairs, diplomacy, social issues, technology, health, and culture. This provision may force privately-owned livestreaming platforms to drastically increase content censorship or even to withdraw from the sector entirely.

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