‘State Capitalism’ and Murdoch’s retreat from China

Ian Bremmer, political scientist and president of the political risk consulting firm Eurasia Group, defines emerging market as ‘a country where politics matters at least as much as economics to the market.’ His new book, The End of the Free Market, singles out states such as China and Russia which practice ‘state capitalism’, a system in which governments use markets to create wealth that can be directed for political ends. The ultimate motive is not economic but political, i.e. ‘maximizing the state’s power and the leadership’s chances of survival.’

This week, Rupert Murdoch’s News Corp announced that it would sell a controlling stake in three Chinese TV channels to a fund backed by China’s state-owned Shanghai Media Group and China Development Bank. This marked a major retreat by the media giant from China after years of difficulties. As to why Mr Murdoch’s love affair with China ended, the Financial Times traced the answer to his speech in 1993 after taking over British Sky Broadcasting:

Advances in the technology of telecommunications have proved an unambiguous threat to totalitarian regimes everywhere. Fax machines enable dissidents to bypass state-controlled print media. Direct-dial telephony makes it difficult for a state to control interpersonal voice communications. And satellite broadcasting makes it possible for information-hungry residents of many closed societies to bypass state-controlled television channels.

Wang Dan: foreign businesses are misjudging China

As Murdoch would have realized by now, in China, politics matters as much as economics, and the rules are very different from those found in a free market economy. Failure to recognize this would lead to costly mistakes. Wang Dan, a leader of the Chinese democracy movement, made three points regarding Murdoch’s misjudgements:

First, China’s opening is policy-directed. In other words, it is a limited opening. In particular, control over speech and press is the government’s bottom line. It is vital for an authoritarian regime to survive. The Chinese Communist Party (CCP) is very clear about that. In China, control over thinking reaches virtually every aspect of life. This includes such fields as entertainment, fitness and cosmetology where foreign capitals think that they can have a free hand. If the CCP detects anything that is not under its control, it will not hesitate to interfere. The recent ‘anti-vulgarity campaign’ is a good example. Under this logic, how can foreign capitals occupy a place in China’s media market? For all its efforts, News Corp’s two-decades-long venture in China ended in failure. This shows that without any political changes, China’s media market will be closed for foreigners.

Second, even if we don’t consider political factors, foreign businesses will still face strong competition from local interest groups. The private equity fund which acquires News Corp’s channels is backed by Chinese groups with strong financial and media background. In fields like infrastructure construction and finance, capitals, technologies and management are important. However, media is different. It requires cultural background, guanxi and familiarity with local conditions. On these, foreign companies cannot compete with local groups. In other words, ‘one with great power cannot defeat a local villain.’

Third, many foreign companies have misconceptions about China’s reform and opening. Seeing that China is becoming more market-oriented, they think that the country can be judged by the standards of a market economy. In fact, they fail to see other aspects of China which have changed very little. China’s emphasis on political stability has undermined the development of institutional guarantees. Changes in the general political environment, policies or even key leaders can have massive effects on the market. This is especially so for the media. Simply said, this is an uncertain market. I believe that Murdoch and News Corp must have the same feeling.

In many ways, China now seems to be more hostile toward western multinational corporations. This is a theme expanded upon in The Death of the China lobby? by Daniel W. Drezner in Foreign Policy. Many foreign businesses worry that, after three decades of strong economic growth, China believes that it can now afford to be less welcoming toward foreign investments. This is shown by China’s employment of policies of ignoring intellectual property rights, forced technology transfer and government procurement skewed towards domestic companies. On the other hand, by alienating western companies, China risks weakening the strong pro-China lobbies led by these corporations in Washington and Brussels.

He Qingling: western multinationals will eventually kowtow to China

However, He Qingling, a Chinese author and economist who is critical of the Chinese government, thinks that foreign businesses would eventually kowtow to the CCP because of their profit calculations. Below are a few extracts from her opinion piece in BBC Chinese:

Over the years, foreign businesses have made a lot of investments in China. Now is the time to ripe the profits. Take the examples of Google, Goldman Sachs and General Electric, the three representative US companies in IT, finance and industry. After the announced high-profile retreat from China, Google is now making efforts to get permission to operate in China, as it hurts too much to abandon a market it has nurtured for years. Goldman Sachs, which has long been appeasing the CCP, also keeps quiet on the accusation of its ‘sucking up money everywhere in China’ by the Chinese media. As for General Electric, although its CEO Jeffrey R. Immelt has recently criticized Chinese foreign policies, it is virtually impossible for it to retreat from China.

According to my years of observation, Beijing has mastered the way of dealing with foreign corporations. By employing a ‘divide and rule’ strategy and showing the cake of the Chinese market in front of them, foreign businesses will neither form an alliance in negotiating with China nor pull out from the country. As long as they can stay, the Chinese government does not need to worry that they will not lobby for it in their home countries.

China is a country which worships power to the extreme. There is no exception to any single group. In front of this power, domestic companies are like eggs against a giant stone. As the main force of the pro-China lobbies, multinational corporations are no more than iron-skinned eggs. Their difference with domestic groups is that, when they collide with the Chinese Dragon, they can still preserve the yolk, although their iron skin will inevitably be scarred.

Re-branding China Requires Honesty, Not Propaganda

The following is a completely unedited submission I made to the Global Times’s op-ed department, who I have been writing pieces for for some time now. I was particularly proud of this one, a response to this editorial. Unfortunately, it did not end up getting published.

[I have removed a few sentences from this post on the grounds that they were quite definitely pretty unprofessional. My bad.]

Re-branding China Requires Honesty, Not Propaganda

A few days ago, the Global Times ran an opinion piece called “How can we make the world like us?” That’s an interesting question, and one that China seems to be asking a lot these days. The government has put a lot of money into expanding their media outlets with the hope of gaining global acceptance, and recently announced a plan to create a short film and accompanying thirty-second commercial that will run on TV in various foreign countries. The commercial will feature a fifty Chinese celebrities.

Wednesday’s opinion piece praises this as a big step forward over China’s previous attempts to rebuild its image, which mostly invovled news stories about economic progress. But actually, I think the opposite is true. News stories about China’s economic growth – which were based in undeniable and clearly evident facts – were a remarkably successful way of changing people’s perceptions of China’s development. But neither those stories nor the commercial is going to help much in terms of making people like China. Neither is the Expo, and neither did the Olympics, really. These show a China that is powerful, yes, but not necessarily one that is likeable. So where has China gone wrong?

The original article says “the Chinese people have long regarded national strength as fundamental to winning respect and affection from the rest of the world. Many Chinese people still swallow the bitter memories of past poverty and the humiliation associated with it.” And while strength may be instrumental in winning respect, it has nothing to do with winning affection. Some strong countries are liked internationally, but others are despised, and the tides turn easily. America, for example, has seen its international image go from “the promised land” to “bully imperialist” primairly because it was demonstrating its military strength. Strength does not breed affection. Too often, in fact, what it breeds is fear.

Economic partnership will not save China either. Foreign countries are no morel likely to be friends with China for econimic reasons than you are likely to be friends with the people working the cash register at your local grocery store. Sure, developing countries may toady up to China for a seat at the table, and even other superpowers can’t afford to ignore China, but that is business. And while business relationships are often also friendly relationships in China, they generally aren’t abroad. It’s all economic; China cannot win affection by flaunting economic power.

Even if that were possible, China certainly isn’t in a position to do so. Whether their complaints are fair or not, an increasing number of foreign CEOs are complaining that foreign companies aren’t treated fairly in the Chinese market and that the government gives unfair advantages to local companies. That kind of approach certainly isn’t going to win China many friends abroad.

Neither is a commerical full of smiling celebrities who quietly “swallow the bitter memories of past poverty and humilation” while presenting a whitewashed image of China to the world. The world knows that China is not a perfect place, so presenting it as one and trying to cover up all of its flaws comes off as dishonest.

It might seem paradoxical that being more honest about flaws will make people more likely to like China, but it makes sense. In interpersonal relationships, people who present themselves publicly as perfect are disliked; they are called arrogant and mocked behind their backs. When they fail, bystanders rejoice. This is essentially what is happening to China now. Foreigners laugh at Xinhua and other domestic media outlets. This isn’t because the people working there aren’t talented – they are – but the limits placed on what they can and cannot say are too great. They are not allowed to be honest. And as a result, the world sees them with suspicion rather than affection.

Returning to the metaphor of interpersonal relations, humble, self-deprecating people generally have little trouble finding friends. People are more likely to trust someone who doesn’t pretend he’s perfect. Why is the US, which is currenly engaged in not one but two unpopular wars on foreign soil, still more popular internationally than China according to a BBC World Service poll from April of this year? I suspect one of the reasons is that the relatively free flow of information into and out of America makes its government seem comparatively honest, even if it is also deeply flawed.

Of course, there’s a difference between admitting one’s faults and advertising them. No one would recommend that China purchase airtime in foreign countries and then run an advertisement about how dangerous Chinese coal mines are, for example. But more honesty would be a good first step.

And if China can’t attract foreign countries by being more honest in its media output, then that’s a clear sign that the government has more important problems to attend to than whether or not foreigners like China. If China wants to be liked, it needs to get honest about its flaws and serious about fixing them.

If it doesn’t it may continue to gain strength and a grudging respect. But it wont gain affection. And it will, almost certainly, gain enemies.

StarCraft 2 in China: “We Gamers Really Suffer”

China may be [insert phrase about economic development here], but in terms of video gaming, it is very much still a third world country, from an official standpoint. A mix of protectionist import regulations and overzealous self-censorship on the part of some gaming companies has given the outside world the impression that Chinese gamers exist in some kind of bizarre gaming hell.

In fact, as anyone who has set foot on the mainland knows, anything available outside China is available here too, and thanks to intellectual property theft, it’s probably cheaper, too. Consoles may be technically illegal, but in actuality, they’re everywhere. The summer’s hottest release, StarCraft 2, was available in China the same day it was available everywhere else, even if it wasn’t officially released here. (In fact, it was even possible to legally purchase the game and download a digital copy from China, which is how I got mine).

Of course, the lack of official support certainly causes frustration. And the perceptions of Chinese gamers outside of China has led to strong prejudices, especially in Taiwan, whose servers are often populated with large numbers of Mainland players looking to get in on the action. One of our commenters was kind enough to point me in the direction of a few BBS posts that discuss these issues; I have translated selected comments below.

Prejudice against Mainland gamers

[A word of explanation: since games are online, Mainland Chinese gamers are usually identified by Taiwanese gamers because they use simplified rather than traditional characters to communicate.]

Original post: “I was cursed at by Taiwanese players for no reason at all! How many others have had similar experiences? For example, being called ‘Mainland dog’ or ‘communist [agongzi] ((阿共仔, which is apparently rude slang for “communist” in this context.))’? And I used to really like Taiwanese people…”

“This happens quite often. Just ignore them, there’s no point in arguing with the brain-damaged. I’ve heard things like ‘Mainland dog’ hundreds of times.”

“There are extremists everywhere; just ignore them, there’s no need to implicate everyone from the same place as the extremist.”

“We go to Taiwanese servers to play games, not to look for people to curse us. And when we get into the games, we don’t talk, because it’s not easy to communicate as you [Taiwanese people] don’t recognize some simplified character forms. PS: I have also been cursed before [on Taiwanese servers].”

“If you’re playing WoW and you go to Taiwanese servers you will definitely be cursed at.”

“As soon as someone Taiwanese spots a simplified character, they just yell ‘Mainland dog’ over and over.”

“Yes, but in someone else’s territory you must swallow your anger, it’s all because we don’t have our own battle.net”

“Just use the Sougou pinyin input method to type in traditional characters.”

Many posters also pointed out that most Taiwanese are not so prejudiced, and urged the original poster not to lump them all together with the bad eggs.

Frustration over censorship and slow official releases

Original post: “Starcraft 2 is out. When will Netease release the official version? They won’t make us wait too long, right? Anyway, battle.net already requires a monthly fee, so how could they see such a big cake and not feel hungry? [i.e., doesn’t Netease want to make money from people playing Starcraft?]”

“Don’t bother waiting. Even if you manage to wait for it, it will just be river-crabbed [censored].”

“Netease: Don’t ask us, we want to put it up online tonight, please go ask the relevant government departments!”

“This user’s post has already been deleted.”

“In the year 3000-something.”

“[Riffing on the official patch that removed all skeletons from WoW] Look at the zerg and their zombies, our goal is to keep there from being any bones at all in the game, so just imagine the Queen of Blades in the background with two meaty wings [in the game, the Queen of Blades has bones for wings].”

“[The official Chinese version] will be out when Starcraft 3 is released.”

“Don’t even hold out hope, if you want to buy it just buy [an unofficial version].”

“In addition to waiting, we will also have to wait some more. We gamers really suffer.”

New on ChinaGeeks

  1. We’ve made a few tweaks to the blogroll, so check that out, and are always looking for more suggestions, especially for Chinese bloggers to follow.
  2. There’s a new post on ChinaGeeks Chinese: 关于矿难的一些思考. Check it out!

Victims of the Gansu, Zhouqu Mudslide

In lieu of posting any news about this disaster — which is widely available in English from any number of sources ((Among the less obvious ones, try following Western media correspondents on Twitter; many of them are on the ground and tweeting from Gansu. I find @melissakchan to be a particularly poignant source of info via Twitter.)) — I would like to repost some photos from Wang Keqin’s blog with translations of his captions. These photos were apparently taken by Wang himself, who is in Zhouqu covering the disaster.

The pain of losing a loved one.

Moving the dead.

Waiting: her home is right under the large rock she is squatting on; where is her family?

Cleaning away the mud.

A human struggle.

A short break.

Crossing the flooded street.

Zhang Wen: “Strong Authorities, Weak Media”

In this blog post, Zhang Wen calls on Chinese media to stand up for their rights when faced with unlawful hassle from authorities, going so far as to criticise journalists for being weak in the face of oppression.

Zhang’s post was inspired by a video of a journalist who eventually abandoned his live broadcast after being hassled while reporting on the explosion of a chemical factory in Nanjing. The video seems to have been harmonised from Youku, but here’s the Youtube version for those who can see it.


The explosion of a chemical plant in Nanjing city centre resulted in many casualties. When Jiangsu TV’s City Channel made a live broadcast from the scene, an official rumoured to be a provincial secretary came forward and asked “What work unit are you from? What’s your name? Who permitted you to broadcast live?”

Faced with this unanticipated questioning, the journalist was obviously somewhat panicked, but still tried to divert the topic, saying: “Xinhua are over there, go and ask them, OK?” The reply that came was “No no no, you, the provincial channel.” (The hidden meaning here is obvious: “If I can’t control Xinhua, then I can’t control you, either.”) The official then continued to demand the journalist’s work unit phone number.

It’s worth pointing out that the title of the live broadcast program was ‘Provincial and City Leaders Personally Conduct the Scene’ (this was the general idea, there may have been a slight difference in the wording). As far as Jiangsu TV’s City Channel was concerned, all they wanted to do was to broadcast the explosion scene to the viewers, and probably had no intention whatsoever to canvas public opinion.

Despite this, the journalist who suffered “menace” had no choice but to rapidly cut off the broadcast signal. After having watched the entire video, I only have one feeling: Officials “have the courage of their convictions”, media “feel the guilt of a thief”.

In Western society, media has been called “the fourth power”, and when compared to administrative, legislative and judicial powers, media isn’t at all frail. You could even say that it has the advantage. Media frequently expose the “poor records” of the foregoing three, criticising their failures to do their duty. But except for the ability to take the latter to court (generally unwinnable), [the foregoing three] have no other methods of retaliation, causing officials to be a little afraid of the media.

But in China, the situation is completely opposite. Officials are full of psychological superiority, especially over state-controlled media, who they basically treat as an underclass, yelling and bossing them about. Any media or journalist that has the gall to disobey will face all sorts of different punishment consequences: replacement of editors, firing of journalists, even discontinuation of printing.

From watching the video, you can feel that when the Jiangsu TV journalist faced interrogation, he was panic-stricken. The same panic happened to Economic Observer News journalist Qiu Ziming. For having exposed the “poor behaviour” of Kai En, a warrant was put out for his arrest by the local police (Suichang County Police Station).

Suichang County police station’s logic was similar to that of the Jiangsu official: who permitted you to report? The hidden meaning is the same: How dare you report something that isn’t beneficial to us?

The only difference is, Jiangsu TV is under the supervision of the Jiangsu provincial committee, and the Economic Observer News is in the domain of Suichang County, which lead to different results: the warrant for Qiu Ziming’s arrest was quickly repealed, whereas those responsible at Jiangsu TV may have met with disciplinary action.

A representative of the News Publishing Bureau declared its position today, saying that it continues to support the legal conduction of surveying of public opinion, and would not tolerate retaliatory attacks on journalists. This declaration is worth affirming, but a policy alone is not enough; it must be conscientiously safeguarded by law.

It’s very obvious, in the China of the present, attacks that meddle with journalists’ right to canvas public opinion and the carrying out of retaliatory attacks on journalists are inextricably linked with [civil] rights. Whether it be like the barefaced “arresting” and “capture” in Xifeng and Suichang, or like the implicit malevolence of officials in Jiangsu and Zhengzhou: who permitted you to broadcast live? Who are you speaking for?

When compared to those that come from the authorities, “retaliatory attacks” on media that come from companies and individuals are a small annoyance. These “retaliatory attacks” [from companies and individuals] can still be reported to authorities and taken to court, but there’s often no way to file a complaint about “retaliatory attacks” from authorities; there are no emergency channels to speak of. But now, there’s a trend that is making people more and more anxious, it’s that authorities are often reduced to being “local gods”, and media meet with a dual danger.

Because of this, if there is no legal protection, this fear among journalists will never be eliminated. Luckily, these days there exists the “collective effect” of the internet, good things are spread far and wide, and bad things are spread even further. This year’s “go to Beijing to capture a journalist” and today’s Suichang “journalist arrest”, both led to great opposition and critical voices on the internet, forcing the “troublemaking” authorities to quickly correct their mistakes.

Looking from the perspective of the recurrence of this type of event, simply correcting errors is insufficient, apologising is also not enough, we must investigate the abuse of the rights of the public, and deprive wrongdoers of their posts. Only then we can truly enact an effect of prevention through fear.

It’s obvious from the current situation that despite having been discussed for many years, how to go about defending the media’s right to report and protecting the personal safety of journalists is still a difficult problem that urgently needs cracking!


Following the Qiu Ziming case, where the Economic Observer continually fought against the warrant for Qiu’s arrest, the Supreme People’s Procuratorate has released a statement condemning the issuing of “low-quality or incorrect arrest warrants”, meaning that journalists may in future be less likely to be bullied into switching off their cameras.

Guo Degang and China’s Weird Celebrity Standards

Guo Degang, if you don’t already know, is a famous Chinese xiangsheng comedian who has recently found himself embroiled in a bit of a scandal involving one of his students and a BTV reporter who the student punched for entering Guo’s home uninvited. Guo then made remarks during a show that caused more of a stir, calling his student “a national hero” and disparaging BTV.

The reporter in question, Zhou Wenfu, recorded the entire incident via a camera, and that clip has now been posted to the internet in its entirety:


For those who aren’t interested in watching all of it (it’s nearly an hour long), it very clearly shows Guo’s apprentice punching the BTV reporter. But it also shows the reporters entering Guo’s house apparently without permission — they do knock, but then immediately open the door and step inside. The reporters also lie repeatedly about whether or not they are filming, saying several times that they won’t record video even though their camera is recording the entire time.

Reactions on the internet have been mixed. Some, of course, are calling for Guo’s head on a platter, but others question how much he even had to do with the event. This blog post, for example, takes aim at the demands that Guo apologize with fierce satire. In a fake “apology letter” from Guo himself, the author writes,

With regards to who should apologize: When the event happened, I wasn’t there, the person who beat the reporter was a student of mine named Li. He has already apologized, so at first I thought it wasn’t a big deal, but later legal experts told me that I was the attacker’s master, and a public figure, and more importantly, the incident happened at my home, so I can’t avoid my own responsibility.

When put that way, I get it. Although my apprentice is already 18, so when he makes mistakes even his own father isn’t responsible for them, I guess that in China someone’s teacher has more responsibility for them than their parents. Otherwise, why would people always curse the parents and teachers when students have a problem? So, I should apologize.

When put that way, I also understand why they had to remove the governor of Shanxi over coal mining accidents, because the coal mine bosses are not public figures, but the governor is! After the first accident, fire the town mayor, then after the second fire the county leader, after the third fire the city’s mayor and after the fourth fire the governor! Although after the fifth and six accidents, I’m not sure who should be fired. So, my student isn’t a public figure, but I am, of course I should apologize. I expect if it happens again I won’t be able to apologize even if it want to, it will but up to a public figure of a higher authority than me. So I must treasure this opportunity.

Additionally, when it’s put that way, I understand why the Japanese have never been apologetic when we curse them even though they killed all those people in Nanjing. They must be thinking that Nanjing is in China; if something happens on China’s land then China must also accept half of the responsibility! Of course, whether or not the Japanese should apologize isn’t what I want to talk about here; it is I who should apologize.

Regarding who to apologize to: there was only one person, a reporter, who was beaten, but the public is very angry and there are all kinds of people denouncing me and trying to teach me what I should do. It looks like just apologizing to that reporter is not enough to ease the public’s wrath; therefore, I solemnly announce that I apologize to everyone from all walks of life in our society.

The post goes on from there, but you’ve probably gotten the general idea. If you can read Chinese, the rest of it is rather amusing.

Unsurprisingly, the scandal and Guo’s comments on it attracted a firestorm from the Chinese domestic media, who by and large took this as another attack on one of their own. While I’m not sure it’s the same as some other recent events, it’s easy to understand the attitude. Which leads, inevitably, to a lot of editorials that sound like this:

This incident should serve as a timely reminder for other celebrities to mind their manners. This may strike stars as unfair. After all, they may ask, why should they always have to behave better than ordinary folks? Why do luminaries have to come off as shiny and squeaky-clean all the time?

Well, simply because it comes with the territory. Stars benefit a lot from being publicly recognizable and popular, but they do have a certain responsibility to set a good example that their fans can follow unflinchingly.

I understand where this attitude comes from. Nor is it my intention to be an advocate for arrogant entertainment figures who use their status to gain things unfairly, or just to abuse others. However, if the past few years have shown us anything, it’s that even China’s “squeaky-clean” celebs aren’t, and regular celebrities are worse. The era of the celebrity as role model is dead — I suspect this happened right around the same time the 24-hour news cycle was born — and TMZ has been dancing on its grave for years now. China might as well give up. I suspect Lei Feng was the last perfect celebrity China will ever see. ((As a sidenote, looking for a link to Lei Feng led me in a roundabout way to this, an internet meme so old it predates my interest in China and, in fact, my owning a computer to watch it on. But it’s pretty entertaining, and obviously the song (from 1995) was quite popular, at least among Northeasterners. Mrs. ChinaGeeks, who was sitting on the floor playing Spider: The Secret of Bryce Manor on my phone when I started playing the video, was able to sing along without even looking up.))

Moreover, while in Guo Degang’s case it seems like pretty much everyone involved is obnoxious and the actual problem isn’t that serious, this odd fixation on having perfect celebrities leads people astray when something real goes wrong, as I argued a few weeks ago in this piece in the Global Times.

Should celebrities be held to a higher standard than regular people? Should they really be held responsible when companies they represent make terrible, cancer-causing mistakes? I think that at least in the latter instance, we probably ought to forget about the celebrities entirely and focus on the actual issue. But feel free to convince me otherwise!

Southern Weekend: “Managing the Internet Using Laws: Praiseworthy!”

The following is a translation of an opinion piece by Chen Min from Southern Weekend.


“As long as a post does not violate national laws, we won’t delete it. As long as it’s reasonable, we will respond quickly and accept it,” said an officer of the Beijing PSB responsible for explaining police standards for their new microblog to the media.

That an official microblog, especially one of such a powerful organ [of state power] could show such respect for [free] speech, respect for netizens, and not use any standards beyond the standard of whether or not something is legal, not using the judgements of the people involved as censorship standards — as long as it doesn’t violate a law, no post can be deleted, regardless of whether it offends an involved party or department — what an exciting boundary that is!

However, I’m more interested in seeing this as a solemn promise from the Beijing PSB; it’s not something that’s currently true. Of course, even if it’s just a promise it’s worth being excited about. At least it indicates a direction, and any movement away from that direction in the future will be a violation of popular sentiment. Aside from [making] laws that accurately reflect the popular will, we shouldn’t make wild statements about [free] internet discourse. We much first firmly establish belief in the concept and a fundamental consensus. The Beijing PSB’s solemn promise looks like the first step towards reaching this kind of consensus.

Additionally, it shows how to effectively supervise, mutually encourage, and moves the government and the people hand-in-hand towards in a mutually-agreed-upon direction.