China Mulling Plan For State Firms To Take Stakes In Major Video Websites To Tighten Control Of Online Content

SHANGHAI — China is mulling a plan for state-owned companies to buy stakes in the country’s leading video websites, in a move analysts say is another attempt by President Xi Jinping’s administration to tighten control on China’s internet content.

The Global Times newspaper Monday quoted a report by independent financial website Caixin Media as saying that state-owned media companies, including China National Radio and several leading local TV and media companies, might be allowed to buy a stake of 1 to 10 percent in companies such as Youku Tudou — China’s biggest video streaming site, now owned by e-commerce giant Alibaba — and rival iQiyi, owned by China’s biggest search engine Baidu.

The Caixin report, quoting a source at an unnamed online video platform, said China’s television regulator, the State Administration of Press, Publication, Radio, Film and Television, was considering giving such companies “decision-making authority” over the websites’ content and operations. The source suggested this would lead to stricter scrutiny of their content, and the possible "modification" of in-house dramas and reality shows made by the sites.

The report said the regulator was still consulting with the parties involved and the plan had not been finalized. But the sensitivity of the topic was apparently highlighted by the fact that the Caixin report was later deleted from the internet, according to the Global Times.

Over the past month, there have been several reports suggesting the Chinese government was considering taking board seats and a stake of at least 1 percent in some internet portals and app operators “in exchange for granting news licenses,” a move analysts said was designed to help the government block news content of which it disapproved.

But the latest report is more detailed and suggests that the government is increasingly targeting video platforms such as Youku Tudou, which grew outside its control and have traditionally contained significant amounts of user-generated content.

The Global Times quoted one expert, Luo Ting of the Communication University of China, as saying such a tightening was necessary due to the impact of such sites on “ideology and cultural security,” and “a proliferation of pornographic and unhealthy content on the Internet.”

Chinese officials, from President Xi Jinping down, have become increasingly outspoken about what they say is the need to “clean up” the country’s internet, which has become the main channel for criticism of the authorities. The Chinese military has warned that the web is a “battlefield” for "hostile foreign forces" seeking to mislead the nation’s young people.

Xi has set up a new top -level government group, which he personally chairs, to map out internet policy, as well as a new “cyberspace administration” in charge of enforcement. China last year also announced a draft internet law with tougher punishments for operators of websites that publish information the government deems unsuitable. It is also reported to be drafting an amendment to the country’s online information law.

Xi, who has repeatedly criticized Western values, has also called for global agreements that countries should respect each other’s internet sovereignty — in other words, not to interfere in how other nations govern their internet space.

If introduced, the proposal reported by Caixin would represent a further tightening of rules on the video streaming sector, which gained enormous popularity in China over the past decade, partly because of relatively light regulation compared to the country's mainstream TV industry.

While China’s state-controlled television channels have been banned from showing foreign dramas in prime time in recent years and have tightly vetted content, major websites were able to bypass such controls for many years, both in programs they produced themselves and those they bought.

One of China’s biggest web portals, Sohu.com, for example, screened the first two seasons of Netflix’s political drama House of Cards — including a plotline featuring a corrupt Chinese businessman with high level connections to China’s government. In late 2014, however, new rules were introduced, requiring preapproval of all scripts of foreign TV shows to be screened online, six months in advance. House of Cards seasons three and four, released since the rules were implemented, have not been shown officially in China.

The government also recently announced a crackdown on China’s live-screening websites, saying these were encouraging pornography — and announced a ban on what was described as the "seductive" consumption of bananas on such sites. Internet cloud services operated by major companies have also been closed or “rectified,” with some companies fined. Major players including Sina.com and Huawei have announced the closure of their cloud services, since authorities said such services were being used to store pornography. However, some experts complained that the move infringed users’ privacy — Chinese authorities have, on a number of occasions, used anti-pornography campaigns to target any type of content they did not like.

Some such clampdowns have previously resulted from turf-wars between government departments in charge of regulating different aspects of the internet. But David Bandurski of the China Media Project at the University of Hong Kong told International Business Times that the latest proposal was further evidence of an increasingly concerted crackdown on online content.

“The priority in terms of information control for the Communist Party has shifted to cyberspace,” he said. “As the entire information sphere in China shifts away from traditional media, a serious challenge has emerged for China's leaders — namely, that much of the activity is happening through privately-owned internet companies.”

Unlike traditional media, Bandurski said, new online content providers have not been under the constant watchful eye of government-owned companies — but the authorities may now be seeking to change this.

“The Party-state power tree of traditional media is dying, and the saplings that grew in its shade are now dominant,” he said. “So the Party now realizes its roots need to be elsewhere.”

It remains to be seen how China's leading internet firms will react to this apparent government attempt to intervene in the market, if the plans become a reality. The Global Times said several major web players declined to comment. But the heads of China’s biggest internet companies have been summoned to meetings with central government officials, to be informed of the latest directives coming from the top, on a number of occasions over the past few years — and observers say they have generally had little choice but to comply with the authorities’ requests.