Let a thousand newspapers bloom

Hu Shuli, Managing editor, Caijing Magazine, Project Syndicate

Whenever I tell a Westerner what I do for a living, many are doubtful. "Is there such a thing as a free press in China?," they ask. "Are there really independent journalists?" The answer is yes and no.

Ever since Deng Xiaoping launched his reforms in 1978, China has been moving from a planned economy to the free market. Its media industry is undergoing a transition equally as wrenching. It is also a more complicated process, because the state, which embraces economic reform wholeheartedly, is not certain about how much media reform to tolerate.

Yet the government's attitude to the press is not one of constant suspicion. After it (belatedly) recognized the importance of transparency in capital markets, journalists gained greater freedom to pursue investigative journalism. So, while the line between the permissible and the prohibited has shifted, it still exists. Some of us walk right up to the line, even nudging it every once in a while. Crossing it, however, remains another matter.

All the same, journalists and editors like myself are increasingly confident in our role as economic watchdogs. In its first issue in April 1998, the magazine, Caijing (Business and Finance Review), published a cover story on Qiong Min Yuan, a little-known real estate company whose share prices skyrocketed by 400 percent. The company's stock was suspended from trading in 1997, after it was charged with overstating profits. A few insiders were tipped off beforehand and unloaded their shares, while 50,000 individual investors lost millions of dollars.

Although everyone knew what happened, no one dared publish details of the inflated profits or the tip-off until we broke the silence. Our article -- Who is Responsible for Qiong Min Yuan? -- offered no investigative scoops or new information. By simply reporting the story and pointing out places where the system failed to protect small investors, we incited a stir. Government watchdogs immediately criticized Caijing.

Our recent focus has been on securities markets. In October 2000, we published a groundbreaking article called The Inside Story of Fund Management, which disclosed a previously suppressed Shanghai Stock Exchange analysis that showed that most of China's fledgling investment-fund-management companies were trading illegally and irregularly on the securities market. By publishing that article, our magazine became the first serious publication ever to report criticism of the fund-management sector and the stock market.

The ten government-affiliated companies mentioned in the report threatened to sue us. But our readers came to our defense, while the prominent Chinese economist Wu Jinglian supported our report in an interview on Central Chinese Television, China's main officially sponsored statewide broadcast network.

In many ways, the fund management story was a watershed moment for Caijing and for the Chinese press in general. The government left us entirely alone, neither banning nor criticizing our report. In a speech around that time, the chairman of the China Securities Regulatory Commission, Zhou Xiaochuan, announced that the securities market welcomed media criticism and supervision.

Since then, China's financial media has become bolder. We've exposed cases involving price manipulation and falsified profits. Last August we reported that Yinguang Xia Holdings, the second largest listed company in China's A share market in 2000, posted a falsified claim of 700 million renmenbi (US$87 million) in profits online. Within hours of publication, the company was suspended from trading, and within a week, security regulators had launched an investigation.

Despite these successes, establishing independent media in China remains a daunting task. In addition to criticism from people in industry, we must overcome other obstacles. Official pressure remains enormous. Information that should be public is not available. Key officials reject requests to be interviewed without explanation. Some listed companies try to prevent us from publishing stories by appealing to government agencies.

In China, where there are no laws protecting the media or freedom of speech, companies who don't like our reports can sue us for allegedly damaging their reputations. More often than not, they win.

There are also internal obstacles to a free, independent press. China boasts 7,000 newspapers and 8,000 magazines, but the government controls free access to the media market by issuing special licenses. Only high-ranking state-owned organizations are qualified to hold these licenses, which grant the ability to publish. Those outside the industry, including readers, are unaware of this closed market structure.

Despite these obstacles, I am optimistic that the media will become a viable monitor of Chinese industry, if for no other reason than that most authorities recognize by now that economic development will falter without it. As the public becomes familiar with Caijing's brand of journalism, it is sure to raise demand for more tough-minded and scrupulous reporting in general, not only on markets, but also on developments in people's communities and governments. Thousands of important stories remain to be told in China. Caijing is but one voice struggling to tell them.