Chinese Communist Party Central Committee Tightens Controls on Cultural Industry

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Chinese Communist Party Central Committee Tightens Controls on Cultural Industry

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Members of the team have structured, negotiated and concluded a range of landmark agreements with China, most notably China's intellectual property rights agreements, market access agreement and the comprehensive US-China bilateral agreement that paved the way for China's WTO membership, covering all goods, services and agriculture in the Chinese economy. The team advises Chinese entities on their outbound commercial, investment and trade transactions, including obtaining regulatory approvals, and on the structuring of transactions and defending against trade actions. We have implemented investment strategies, structured business transactions and devised sophisticated market access strategies for multinational companies around the world, and have negotiated with and litigated against virtually every major trading nation, as well as emerging market countries. The firm has represented major multinational companies in investigations across China, Hong Kong, Japan, South Korea and Thailand. For one US-based client, we helped reduce or eliminate fines following an antitrust investigation in China, Japan and Korea, securing what has been reported as the largest-ever reduction in fines from the US Department of Justice following its investigation. Additionally, WilmerHale has conducted internal investigations for Asian businesses, including one dealing with alleged kickbacks and extortion by sales representatives and another related to a major US-based manufacturer’s acquisition of a Chinese firm for $300 million.
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The communiqué of the just concluded Plenum of the Chinese Communist Party Central Committee (Sixth Plenum of the Seventeenth Central Committee) further details the Party's determination to tighten political control while increasing investment in the cultural sector. The test will be the extent to which it is possible to develop culture, which is inherently dependent on creativity, in an even more tightly controlled environment. For foreign businesses the objective will continue to be the identification of areas under existing regulations in which profitable transactions can be made as the communiqué shows no sign of relaxing existing restrictions on foreign imports or investment. Indeed, the communiqué is replete with references to struggle (奋斗) and other terms that recall images of fighting against counter-revolutionary forces.

The communiqué reveals substantial concern within the Party over the erosion of morals (道德) even as China has become relatively developed. Rather than allow greater freedom to an increasingly well-off population with greater leisure time and access to consumer electronics and the Internet, the Party's prescription is to enhance political education and elevate traditional Chinese culture in order to develop socialist culture with Chinese characteristics (中国特色社会主义文化) and safeguard national cultural security (国家文化安全). Beneficial culture from abroad will be absorbed (吸收外来有益文化) while Chinese culture will be exported to enhance China's soft power (增强国家文化软实力).

From an economic perspective, the communiqué calls for elevating the role of culture in state planning at all levels of government. This portends an increase in funding for culture in its various manifestations through 2020 in accordance with "scientific" development. Particular attention is given to Internet content including: the dissemination of both traditional and modern culture through advanced media including cellular telephones; the development of the news industry; management of the Internet to foster civilized (文明) content and filter out harmful content; and strengthened regulation of social networks and instant messaging to regulate content. Development of established cultural industries like publishing, film and television as well as newer media like electronic publishing, digital animation and gaming will be accelerated.

From a political perspective, the cultural industry is to be centered in Beijing, the national capital, and ownership will continue to be dominated by companies owned or controlled by the state, with other ownership forms allowed in accordance with regulations. Endorsement of state-controlled companies reflects current suspicion of the so-called VIE (variable interest entity) structure devised to circumvent restrictions on foreign ownership. Entities engaged in culture are called upon to corporatize themselves and become more commercial and self-sustaining, including through exports. Foreign investment will similarly be allowed in accordance with regulations, but there is no indication of any intention to relax existing restrictions on content or ownership. Foreign technology will still presumably be welcomed subject to existing restrictions.

The fundamental questions raised by the communiqué and indeed by the Plenum itself are the compatibility between conflicting goals. To what extent will it be possible to develop a flourishing cultural industry with products of popular appeal while tightening control over cultural expression? To what extent will a better educated and more prosperous populace respond positively to increasing doses of political education when such content is already failing to deliver? To what extent will a young population brought up on modern music and dance respond to traditional culture with which they have little familiarity? Indeed, to what extent will China's 'netizens' accept tightened control of the Internet and social networks? The answer may lie in the communiqué's call to elevate patriotic or nationalistic content in culture and education.

Cultural bureaucrats have already begun to follow the line of the Plenum. The State Administration of Radio, Film and Television (SARFT) has issued an order restricting the broadcast of reality, game and other free-flowing entertainment shows on satellite TV stations in favor of news and cultural programming without regard to audience ratings. Whether or not such policies remain in place, it is unclear how they can foster development of cultural industries or China's soft power.

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