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February 1, 1996

China's Curbs on News to Be Cited in Trade Talks, U.S. Says

By DAVID E. SANGER

WASHINGTON -- Two weeks after China announced a broad plan to restrict the flow of news and economic information into China, the Clinton administration said Wednesday that it would raise the subject in trade negotiations next week, the first indication that China's efforts to control Western news operations may soon become a new source of friction between the two countries.

"This is, of course, an issue of free speech and censorship, but it is also at the heart of our trade relationship," said U.S. trade representative Mickey Kantor. "We don't know how China plans to implement its restrictions, but clearly it is a step in the wrong direction, to state the obvious."

While the administration has chosen to treat China's restrictions, announced Jan. 16, as an impediment to trade, Beijing clearly regards it as an issue of national security.

The order was directed at the Reuters and Dow Jones , news services, which are selling economic information and political news in China. They are now required to be supervised by the official New China News Agency, which will have control over the content of its news reports.

The agency will also control their marketing to Chinese customers, which creates another trade problem: Dow Jones and Reuters are competing with the state-run news agency's own products.

Kantor said Wednesday that the wording of the restriction was so broad that U.S. officials are still uncertain how they will be applied.

The announcement of the new regulations included the warning that "foreign economic information providers will be punished in accordance with the law if their released information to Chinese users contains anything forbidden by Chinese laws and regulations, or slanders or jeopardizes the national interests of China."

In China, regards all sorts of economic statistics as property of the state, and it has periodically prosecuted Chinese reporters for revealing classified economic data -- usually statistics that are considered routine in Japan, the United States and Europe. But it has never attempted to do the same with foreign news organizations.

China's usual model in controlling information -- and other economic machinery -- is Singapore, the tightly controlled city-state whose economy, led by ethnic Chinese, has been one of the wonders of Asia. But even in Singapore, Western news is usually filtered for sexual or political content, not financial data.

Kantor said that the restrictions would be raised next week in Beijing by Lee Sands, who directs the China desk of the trade representative's office.

Putting the issue at Sands' level, one State Department official said Wednesday, "keeps this from getting too political, too ideological. By treating it as a trade barrier, we hope to keep the issue somewhat contained." Sands' chief mission is to press China for compliance with an agreement signed last year to protect U.S. software, movies and videos from piracy.

The financial information business has been a booming one in China, with several news organizations attempting for the first time to sell data to Chinese securities houses, businesses and semigovernmental agencies.

Some U.S. officials have argued that the Chinese government's restrictions will collapse of their own weight, once Chinese businesses begin to fall behind because they cannot get up-to-date information on economic conditions.

But in the short term it could greatly limit trade with China, and it is particularly a threat to Hong Kong, over which China will regain control in July of 1997.

Hong Kong has always been the financial information center of Southeast Asia, and it is unclear whether the new Chinese restriction will apply there after it reverts to China's control.


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Copyright 1996 The New York Times Company