"We are studying a system to eliminate newspapers with poor economic performances," said Wang Guoqing, deputy director of the Department of Newspapers and Magazines under the General Administration of Press and Publication.

"Without such a system, our newspapers' operations can never become truly market-oriented," Wang said.

No newspaper has been closed since 1995 due to poor economic performance. China has about 2,000 newspapers.

The system for closing newspapers would be based on scientific evaluation, Wang said.

The administration would evaluate newspapers based on population, economic development, the cultures in their provinces and cities and special characteristics.

The administration would then release reference indices of the newspapers' circulation volumes and advertising revenues.

Newspapers with circulation volumes and advertising revenues significantly lower than the indices would receive a warning at the end of the year.

A newspaper that receives two warnings could lose its licence.

The administration is trying to prod Chinese media, especially newspapers, into operating in accordance with market rules, Wang said.

Officials with the administration announced in late February reforms aimed at transforming Chinese publications into self-sufficient corporations.

China's media would be forced to operate like an enterprise, rather than a government-affiliated organization, under such a system, Wang said.

Most of China's media are government-affiliated organizations.

Government departments to which the media are affiliated could not interfere in the contents of reports.

China had 38 newspaper groups, 2,111 newspapers and about 8,000 magazines by the end of 2001.

Some publications, after undergoing market-oriented reforms, have posted good revenues.

Media advertising revenues last year surpassed 80 billion yuan (US$9.6 billion).

"China Media Investment Report 2002-03" predicts ad revenues this year will exceed 100 billion yuan (US$12 billion).

"China Media Investment Report" is an industry analysis report released by Global China (Beijing) Media Consulting Co.

Some leading newspapers, such as Guangzhou Daily Group, posted in 2001 revenues exceeding 4 billion yuan (US$483 million).

However, many newspapers and magazines still receive financial support from government departments.

Experts suggest poorly operated newspapers waste resources, especially excellent editors and talented writers.

On the other hand, it is difficult to close poorly operated newspapers.

"Each poorly operated newspaper has a government department behind it, which is the major impediment to closing it," Wang said.

Most poorly run publications stress their roles as government mediums when defending their existence.

This situation will gradually be eliminated, as the reforms are implemented, Wang predicted.

Other reforms are also being initiated.

The administration will soon approve the creation of more newspapers.

With the exception of some newspapers for overseas readers, there has been no approval of news publication registration since 1995.

While some new newspapers are publishing in China, they are operating under former publications' registration numbers.

Old newspapers are often poorly run, but they can make profits by selling their registration numbers. Although the administration discourages the practice, it is not illegal.

"A system to close publications and the appearance of new newspapers under old ones' registration numbers are the Chinese way of reforming the media," said Liu Jianming, a journalism professor with Tsinghua University.

Money-losing newspapers could easily be closed if government departments did not financially support them, Liu said.

But given such support, a system that compels the closure of such newspapers might be necessary, Liu added.

"A basic solution ... is to allow private investors to publish newspapers," Liu said.

While speeding up reforms in the media sector, China could open wider to the outside.

China, beginning on May 1, in accordance with its promises to the World Trade Organization (WTO), will allow foreign investors to retail newspapers, magazines and books in the Chinese market.

Foreign investors with more than 5 million yuan (US$603,800) in registered capital are eligible to apply for approval to retail newspapers, magazines and/or books in China.

Next year, China will allow foreign wholesalers in the newspaper, magazine and book sectors.

However, foreigners will not have input in newspapers' editorial decision-making, Wang said.

(Business Weekly May 10, 2003)