China: No moratorium set on foreign investors

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BEIJING -- China's media regulators on Monday denied a recent Financial Times report that said that the State Administration of Radio, Film and Television had imposed a moratorium on new foreign investment in television and film production companies.

The FT report of Thursday, which was widely picked up by other international media, said that Zhu Hong, spokesman for SARFT, said in an interview that China will allow foreign investments in individual movies and TV dramas with local partners, but will not approve the creation of new production companies.

But a SARFT official who refused to be named said Monday that the British daily got it wrong. "The FT did interview Zhu Hong and then submitted the quotes to SARFT," the official said. "We then asked the FT to change the quotes because they were not accurate. Spokesman Zhu Hong never said such things."

When asked where Zhu's remarks came from, the SARFT official said "They were probably made up by the FT."

But FT reporter Mure Dickie said Monday that he stands by the accuracy of the tape-recorded interview.

In the story, which ran on FT Web sites in English and Chinese, Zhu Hong was quoted saying something that many in the industry have suspected over the past year: that Beijing officially had put aside landmark rules issued in 2004 allowing foreign investors to take minority stakes in local production units.

"Our policy is to temporarily not approve the creation of new joint companies," the FT quoted Zhu as saying.

Zhu added SARFT will not widen the landing rights of such foreign broadcasters as News Corp's Star TV, now limited to upscale hotels, and south China's Guangdong province, the FT reported last week.

On Monday, the unnamed SARFT representative said there are no new policy governing foreign investments in the media sector and all companies should follow old regulations. Liu Chun, of the International Exchange Division of SARFT's Film Bureau, denied that the agency had such a policy, The Associated Press reported Monday.

Industry analysts and domestic and foreign film and TV producers working in China say that new regulations or no, Beijing's Communist leaders are worried that opening the media sector could risk allowing international media giants to gain a foothold in China.

By forcing international companies to work through individual projects, Beijing allows local companies to grow from their interaction with foreign management systems and imported high technology, helping them compete without giving away control.

Currently, the most visible Sino-foreign production company in China is Warner China Film HG, formed in 2004 as a Warner Bros.' joint venture with state-run movie giant China Film Group Corp.

Last month, Warner's movie theater building unit pulled its investment from China after four years citing a change in rules that barred the company from majority ownership of their theaters (HR 12/9).
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