VZCZCXRO6083
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #2248/01 2180918
ZNR UUUUU ZZH
P 060918Z AUG 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 5546
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 002248 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM; EEB/CIP 
STATE PASS USTR (CHINA/IPR OFFICES) 
COMMERCE FOR ITA/MAC (KASOFF, MELCHER, WINGO) 
 
E.O. 12958:  N/A 
TAGS: ECON ETRD EINV KIPR CH
SUBJECT:  CULTURAL INDUSTRIES REJUVENATE! (NOT ABOUT MARKET ACCESS) 
 
Reftels:  Beijing 1654, Beijing 1339, Beijing 592, Beijing 585, 
Beijing 583, Beijing 515, Beijing 443, Beijing 425, Beijing 326, 
Beijing 151 
 
¶1. (SBU) Summary:  ChinaQs State Council July 22 announced it would 
lower the investment threshold in the entertainment and cultural 
industry and allow more private and foreign interests to invest in 
state-owned media groups.  The moves were announced along with 
approval of a Culture Industry Rejuvenation Plan, the eleventh of a 
series of industry revitalization plans China has issued this year. 
U.S. film industry contacts expect no significant impact on market 
access for foreign products.  Significantly, this is the first of 
ChinaQs industrial revitalization plans with a clear emphasis on 
domestic consumption rather than production.  End Summary. 
 
¶2. (SBU) Chinese media reported July 22 that the PRCQs State Council 
approved a Culture Industry Rejuvenation Plan, the eleventh in a 
series of industrial revitalization plans issued in 2009. The plans 
seek to stimulate domestic demand, consumption, and economic 
restructuring in response to the global economic downturn.  The PRC 
originally only heralded ten such plans, making this latest plan 
unexpected (see Reftels for prior reporting).  An official text has 
yet to be published, though the plan reportedly will Qactively 
promoteQ multimedia broadcasting, digital media, web and mobile TV 
service, as well as investment in publishing and advertising.  The 
National Development and Reform Commission and the Ministry of 
Commerce currently severely restrict foreign investment in these 
sectors. 
¶3. (SBU) The planQs primary objectives include accelerating 
development of entertainment and media; innovating cultural products 
and services based on changes of consumption structure and needs; 
restructuring media outlets; fostering emerging cultural industries 
such as mobile multi-media TV, internet media, mobile phone media; 
encouraging and supporting export policies of cultural products and 
services; and expanding international trade in cultural industries. 
Like previously released revitalization plans, this too emphasizes 
expansion of Qindigenous innovation. 
¶4. (SBU) Positive aspects of the plan reportedly include lowering 
market access barriers for private and foreign capital entry into 
the cultural sector, as well as reform of the shareholding and 
ownership structure of cultural SOEs.  Beyond financial support and 
inducements to attract investment, the plan also contemplates 
greater intellectual property protection in content production, and 
more robust IPR enforcement in the market.  The plan complements a 
May 2009 initiative, in which the government issued new guidelines 
for financial support of the culture trade and industry, including 
Exim-Bank of ChinaQs provision of export credit guarantees and loans 
and financial consultation. 
ChinaQs Cultural Trade Booming 
------------------------------ 
¶5. (SBU) According to a 2008 Ministry of Finance and Commerce 
report, ChinaQs 2008 total core trade in cultural products stood at 
RMB 15.84 billion (USD 2.32 billion) up 22.6 percent year-on-year; 
import of cultural services reached RMB 25.37 billion (USD 3.71 
billion), up 29.5 percent year-on-year.  ChinaQs major export in the 
cultural domain consists of electronic games; audio/visual products 
comprise its key imports.  The Chinese Academy of Social Sciences 
estimates the value-added component of the entertainment and 
cultural industry has grown at more than 20 percent annually in 
recent years, though still only accounting for less than 5 percent 
of GDP. 
 
Industry Reaction 
----------------- 
¶6. (SBU) U.S. film industry representatives report significant 
impact for its interests will likely be minimal, but note with 
interest the planQs effort to encourage foreign capital 
participation in this sector.  More broadly, U.S. industry remains 
committed to encouraging China to allow greater market competition 
and more market-oriented practices in all areas, including 
eliminating quotas on the import and distribution of foreign 
entertainment products, as well as to eliminating discriminatory 
regulations against foreign companies in equity ownership of 
investment projects and joint ventures. 
 
Comment 
------- 
¶7. (SBU) This latest industry revitalization plan clearly aims to 
stimulate ChinaQs domestic consumption and to lay foundation for 
greater development of ChinaQs Qcultural industryQ in coming years. 
That this plan is the first to focus more on consumption, rather 
than production, is noteworthy for the economic Qrebalancing 
scorecard.  While the plan might provide limited windows of 
opportunity for U.S. investment in ChinaQs tightly-protected 
QculturalQ realms, as well as much desired further progress on IPR 
protections, at least for Chinese rightsQ holders, longer-term, 
substantial opportunities and benefits for U.S. interests remain 
uncertain. 
 
BEIJING 00002248  002 OF 002 
 
 
 
GOLDBERG