How China’s Censorship Harms U.S. Media, Companies, and Investors

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Senior Research Analyst for East Asia

The Chinese regime’s never-ending struggle to suppress information that could threaten its grip on power keeps citizens in the dark on topics of vital importance. But it has also taken a growing toll on U.S. media attempting to report on the world’s second-largest economy, and directly affected other businesses operating in China, with real consequences for U.S. investors.

U.S. Media

Pressure on foreign media and harassment of their frontline journalists has increased over the past five years, following a brief period of relaxation surrounding the 2008 Beijing Olympics. In the past two years, this has often taken the form of delaying or rejecting visas for journalists known for hard-hitting reporting, especially on human rights or high-level corruption. In the last six months, two more prominent journalists have been forced to discontinue their reporting from China—Paul Mooney, who was transitioning to Reuters, and Austin Ramzy, who was taking up a post with the New York Times.

In addition to reprisals against individual journalists, the Chinese authorities increasingly target entire news organizations for intimidation or punishment. Some of these tactics—such as visits to senior executives by Chinese diplomats or intrusive cyberespionage—take place outside China’s borders, including within the United States.

Chinese government hostility generates conflict within a media company, as it becomes clear that intrepid news gathering and adherence to journalistic principles will carry an economic cost. This problem recently gained greater international attention after senior executives at Bloomberg News apparently decided to retreat from publishing investigative reports on the wealth of the Chinese political elite due to the potential damage that government reprisals could inflict on the company’s other interests in China, primarily the sale of its financial data terminals.

Over time, the various obstacles thrown up by Beijing have had a deleterious effect on international news coverage of topics ranging from official corruption to public health. While excellent reporting from China continues to reach newsstands and television screens around the world, the intimidation of sources forces journalists to abandon potentially newsworthy stories, or invest an inordinate amount of time and money to complete them. Meanwhile, lack of access to regions such as Xinjiang and Tibet has hindered independent investigations of severe police crackdowns, enforced disappearances, and torture. One academic study similarly found that reports about the persecuted Falun Gong spiritual practice in major foreign news outlets were few and far between, despite the large scale and severity of abuses suffered by its adherents.

U.S. Companies and Investors

Chinese censorship does not simply affect news organizations. Virtually any U.S. firm operating any information service or website accessible to Chinese users faces pressure to implement Beijing’s surveillance and censorship directives. One recurring example involves the removal of mobile phone or tablet applications from online stores available in China. For example, since 2011, Apple has repeatedly pulled applications from its China app store that granted users access to circumvention platforms, independent news sources, or uncensored content on politically sensitive topics. The app designers have complained that they receive little explanation—other than that the content was deemed “illegal” in China—and that there are no avenues to appeal the decisions.

Even more broadly, the arbitrary nature of the censorship system poses a general and constant risk to businesses and investors. It is difficult to underscore strongly enough the capricious and often opaque nature of the decisions made by Chinese regulators and censorship bodies. Three relatively recent examples illustrate this dynamic and the various forms it can take:

  • In the fall of 2012, following an investigative report by the New York Times into the wealth of then premier Wen Jiabao’s kin, the Chinese authorities imposed a block on its website. By blocking not only its English but also its newly launched Chinese-language version, the sudden decision caused palpable financial damage to the company. Overnight, the Times’ stock lost 20 percent of its value, though it slowly recovered over the following months. The paper was also forced to renegotiate agreements with numerous advertisers, leading to revenue loss. The blocks remain in place to date.
  • Last month, China’s state media regulator ordered Chinese video-streaming companies to remove four U.S. television shows from their services. The decision undermined agreements that had been negotiated between the Chinese firms and American content providers. The four programs—The Big Bang Theory, The Practice, The Good Wife, and NCIS—were all popular in China, with The Big Bang Theory reportedly scoring more than one billion views before its removal. No explanation was provided.
  • Also last month, regulators unexpectedly announced that the Chinese internet giant Sina Corporation could have two crucial licenses revoked due to lewd content posted on its site. The move, which came amid the government’s latest antipornography campaign, was somewhat shocking given that Sina has one of the country’s most robust in-house monitoring and censorship systems, and is being singled out and punished harshly for its apparent neglect of only 24 pieces of content. Shortly after the announcement, Sina’s stock dropped to a one-year low on the New York Stock Exchange, less than two weeks after its subsidiary microblogging service, Sina Weibo, held an initial public offering. The very real danger of such censorship-related punishments have prompted firms like Sina to include extensive warnings to investors in their filings with the U.S. Securities and Exchange Commission.

A Response from Washington

Based on the Communist Party leadership’s actions over the past year and a half, there is little hope that the regime will significantly and voluntarily loosen its information controls. On the contrary, censorship now seems to be a higher priority for Beijing than at any time in the past decade.

Any policy responses by the United States should take this as their starting point. Rather than trying to convince the Chinese authorities that openness is to their benefit, U.S. officials should identify points of leverage or loopholes that take advantage of weaknesses within the censorship apparatus in order to proactively pressure the Chinese government to change its behavior.

U.S. leaders should certainly raise restrictions on freedom of expression in meetings with Chinese counterparts, but they should also expand support for efforts that provide much-needed information to Chinese citizens on a wide range of topics—and that do not rely on Chinese government permission. This can include the development and dissemination of circumvention tools, the documentation and reposting of censored social-media content, and projects like the U.S. embassy’s release of air-pollution data in China.

Congress in particular should reconsider and pass the Global Online Freedom Act, in order to improve transparency and accountability on internet censorship and surveillance for both American companies operating in China and Chinese firms listed on U.S. stock exchanges.

Finally, the Office of the U.S. Trade Representative should be more creative in its use of World Trade Organization processes and other economic arbitration mechanisms to challenge Chinese regulatory decisions that impose a trade barrier on U.S. media companies.

The U.S. government is obliged to take such actions to defend the interests of its own citizens, but any progress will clearly benefit ordinary Chinese people and the wider world.

This blog post is based on Sarah Cook’s May 15 testimony before the U.S.-China Economic and Security Review Commission. The full submission is available here, and the hearing can be viewed in its entirety on the commission’s website. Information was also drawn from Cook’s recent report for the Center for International Media Assistance, The Long Shadow of Chinese Censorship: How the Communist Party’s Media Restrictions Affect News Outlets Around the World, which is available here.

Analyses and recommendations offered by the authors do not necessarily reflect those of Freedom House.

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