The United States has told China to get serious about relaxing the restraints on financial information providers in a letter that could represent a final warning before the U.S. asks the WTO to intervene in the matter, the Associated Press learned Wednesday.
In the letter to Chinese trade officials, the office of the U.S. Trade Representative signaled it has run out of patience with China's refusal to change rules introduced two years ago that appeared to boost the official Xinhua News Agency at the expense of financial information companies such as Reuters Group PLC and Bloomberg LP.
The World Trade Organization said it has yet to receive a formal complaint from the United States, which is pursuing China in separate trade cases over rampant Chinese product piracy and measures hindering sales of U.S.-made auto parts, CDs, DVDs and books, in separate cases.
Washington stopped short of saying it would launch a new WTO dispute, said trade officials, who saw the U.S. letter dated Jan. 25 but demanded anonymity because of the sensitivity of the issue. The USTR in Washington refused to confirm the letter or to outline its plans. The Chinese Commerce Ministry could not immediately be reached for comment.
The restrictions announced in 2006 were part of an effort by the communist government to reassert control over the increasingly porous flow of information and to help transform Xinhua from a purveyor of state propaganda into a modern, profitable news agency.
Targeting the rapidly expanding Chinese market for financial information, the rules make Xinhua both a competitor and regulator, requiring that data, videos and photos be funneled only through Xinhua-approved distributors. The only currently approved distributor is a Xinhua subsidiary.
The revised Xinhua regulations seemed to back-track on a 1996 agreement, which gave Reuters, Bloomberg and Dow Jones Newswires permission to sell financial information to Chinese banks, government agencies and other institutions. The rules also formalized already severe restrictions on The Associated Press and other foreign agencies which have sought wider access to the Chinese market, especially ahead of this year's Beijing Olympics.
In a submission to the WTO on Nov. 12, the U.S. questioned how Xinhua could be "both a major market competitor of, and the regulator of, foreign financial information service providers in China." It urged Beijing to set up an independent regulator and to return to conditions that providers operated under from 1996-2006, allowing direct business relations with clients.
The U.S., the 27-nation European Union and human rights groups have criticized the restrictions as an effort to restrict free expression.
But China has defended them by pledging that Xinhua will not abuse its new monopoly.
Xinhua has said it "seeks no economic gains" from the regulations and has sought to reassure Chinese banks and securities firms worried of losing access to foreign economic news that they need to do business. It has said the rules are meant to promote the "sound and orderly" distribution of news, and that reports damaging China's social stability and national unity, or violating other taboos, are banned.Associated Press
