At a forum on the culture industry in Shuozhou, Shanxi Province, Culture Ministry official Ainiwaer Abuduxukuer said China has huge potential to develop the sector economically because of the nation's history and cultural heritage.

China includes entertainment, media, communications and IT content services in its definition of "culture industry," along with the more traditional arts of painting and theatre.

The forum set out examples of "cultural units," such as museums and libraries, which could be run as individual businesses.

The changes are in their initial stages and at the moment profits from the sector account for a small proportion of the country's GDP, Ainiwaer said.

Zhang Xiaoming works with the Cultural Research Center under the Chinese Academy of Social Sciences. He and his colleagues have just compiled a report about supply and demand in the industry and have identified a gap between the two.

Zhang said that the basic obstacle impeding the development of China's culture industry is an antiquated management system. Although China has been converting to a market economy for more than two decades, the sector is still part of the planned economy.

In the past few years, China has set up the so-called "units for cause," which are neither government bodies nor enterprises. They are owned and managed by the government, and engage in social services such as education, health and culture.

Such units tend to use large quantities of resources but to be poorly managed. They are a burden on public finances.

Reform of units for cause has begun, but the culture sector is lagging, according to Zhang.

"Most of the cultural units, like museums and libraries, should be opened up to the market. The government only needs to make policies for the industry," Zhang said.

Ainiwaer said innovation and the use of new techniques are important for the development of China's culture sector.

(China Daily August 18, 2004)