Identifier
Created
Classification
Origin
07BEIJING7409
2007-12-07 10:37:00
CONFIDENTIAL
Embassy Beijing
Cable title:  

CHINA'S "INDEPENDENT" PRESS: ECONOMIC OBSERVER

Tags:  PHUM PGOV PROP CH 
pdf how-to read a cable
VZCZCXRO6189
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #7409/01 3411037
ZNY CCCCC ZZH
P 071037Z DEC 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 3900
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHNSC/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 04 BEIJING 007409 

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/07/2032
TAGS: PHUM PGOV PROP CH
SUBJECT: CHINA'S "INDEPENDENT" PRESS: ECONOMIC OBSERVER
SEEKS TO BECOME FINANCIAL TIMES OF THE EAST

REF: A. BEIJING 07035

B. BEIJING 06864

Classified By: Political Minister Counselor Aubrey
Carlson. Reasons 1.4 (b) and (d).

Summary
-------

C O N F I D E N T I A L SECTION 01 OF 04 BEIJING 007409

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/07/2032
TAGS: PHUM PGOV PROP CH
SUBJECT: CHINA'S "INDEPENDENT" PRESS: ECONOMIC OBSERVER
SEEKS TO BECOME FINANCIAL TIMES OF THE EAST

REF: A. BEIJING 07035

B. BEIJING 06864

Classified By: Political Minister Counselor Aubrey
Carlson. Reasons 1.4 (b) and (d).

Summary
--------------


1. (C) Managers and journalists from the Economic
Observer, China's only "private" (non-Party-
affiliated) newspaper, which was launched as a nation-
wide, weekly paper in 2001 and is owned by a
commercial provincial holding company, told PolOffs
recently that the Observer is alive and well and
making a profit in Beijing. Aimed at conveying timely
economic news to emerging professional and commercial
elites and government leaders, the Observer's goal is
to become China's Financial Times. The paper also
pursues a quiet agenda of political change, relying
heavily on self-censorship to steer clear of political
pitfalls, but has been censured in the past when it
strayed too far from approved content. It remains an
interesting test case of the limits of media reform in
today's China, but so far does not appear much more
likely than some provocative Party-connected
commercial media to push the envelope. End summary.

Origins: China's Only Corporate-Owned Newspaper
-------------- ---


2. (C) PolOffs met recently with the Economic
Observer's Editor-in-chief Liu Jian (protect),
Publisher ("shezhang") Zhao Li (protect),and former
senior journalist Zhang Jingping (protect),who
offered an extensive briefing on the ins and outs of
running an "independent" paper in China. (Note: For
additional context, this cable incorporates comments
from former editor-in-chief, He Li (protect),whom
PolOffs interviewed in October 2003.)


3. (C) The Economic Observer is one of the very few
national media outlets in China (and the only
broadsheet newspaper we are aware of) that is not
attached to a government or Communist Party organ.
The paper's publisher and editors answer to the board
of directors of a commercial holding company, albeit a
provincial government-owned company, rather than to an
official "media group" under the jurisdiction of a

Party propaganda organ or Party newspaper. (Note:
The prominent, Beijing-based financial magazine
Caijing is the other notable privately-owned media
outlet in the country. A Guangdong-based national
magazine Citizen (Shimin),founded in 2005, represents
a third effort to test the waters of private media
ownership but is struggling to survive.)


4. (C) Prior to 2001, the Economic Observer was a
Shandong provincial paper aimed at rural readers. In
2001 the Sanlian Group, a Shandong provincial
government holding company specializing in electronics
retail (not affiliated with the similarly-named
Sanlian media companies),took control of the paper
and re-launched it as a national business-oriented
weekly. Publisher Zhao said Sanlian stumbled into
newspaper ownership after taking over the loss-making
Economic Observer as a favor to provincial leaders.
Sanlian then brought in Zhao, a former business
journalist, to run the publication. Zhao meets every
few weeks with the Sanlian board of directors. While
the Sanlian Group remains the Observer's primary
owner, the paper is courting foreign investment for
its non-editorial operations. In 2004, the Hong Kong
media giant TOM Group was reportedly contemplating an
investment in the Observer that would allow the paper
to move from weekly to daily publication. While that
deal never materialized, Zhao told PolOffs he was about
to travel to the United States for talks with potential
American investors in the Observer's advertising
operations.

China's FT: Ambitious Goals
--------------


5. (C) Editor-and-chief Liu and Publisher Zhao
described their ambition as making the Observer
China's answer to London's Financial Times (FT),a
goal the paper has pursued from the outset, according
to he Observer's previous chief editor, He Li. The
Observer's style and layout, including its samon pink
newsprint, reflect a conscious efort to emulate FT.

BEIJING 00007409 002 OF 004


Zhao said the Observer aims for the same
internationally-oriented and highly-educated
demographic in China as its main competitor, Caijing:
Sixty-five percent of its readers are big enterprise
managers, 10 percent are government officials, 10
percent are university students and the rest are
accountants, lawyers and other professionals. The
paper enjoys a circulation of 200,000, Liu said. Liu
and Zhao claimed the Observer turns a profit, though
they declined to say how much. (Note: He Li said
that the paper began to turn a profit in its third
year, 2003.) Zhao said he handles overall management,
deals with the Sanlian Group, and provides general
editorial and quality review, while Liu makes the
weekly editorial calls. Zhao said that in addition to
Caijing, the paper's other main competitor is the
Guangdong Party Committee paper, 21st Century Economic
Herald, but that the Observer attracts readers through
a unique "Beijing-flavored" perspective.


6. (C) Zhang Jingping, a senior journalist at the
Observer until September, separately agreed that the
paper's style, layout and advanced technical know-how
are first rate and that Liu and Zhao understand how
modern newspapers operate. Zhang said the paper's
other major strength is its high-quality special
columns. It is able to attract contributions from
prominent experts in a variety of fields. These
qualities, Zhang observed, are a major factor in the
paper's appeal to urban elites. However, in Zhang's
view, the paper's news coverage is "quite ordinary,"
because the Observer is unable to break out of
limitations imposed by China's politically-controlled
media system. (Note: Former chief editor He Li
claimed in 2003 that there were few restrictions on
economic news; the exceptions were sensitive national
issues such as exchange rate adjustment.)


7. (C) Both Liu and Zhao lamented that a lack of
talented reporters is one of their biggest challenges.
China has few older, seasoned reporters because
journalism does not meet rising expectations of income
and social status, Zhao said. Furthermore,
journalists tend to move on to more lucrative
professions, like public relations, at the earliest
opportunity. Pointing to an Observer reporter sitting
across from him, Zhao said that an Internet company
had recently tried to "steal" her with an offer of
more money. In the view of journalist Zhang, the top
talent goes to major Party media, like the official
news agency Xinhua and the Party's flagship paper,
People's Daily, with the resources and prestige to
attract the best college graduates.

Independent, But Not Free
--------------


8. (C) Zhao and Liu described the Observer as an
"independent" ("du li") newspaper by virtue of its
non-government ownership and claimed it has no high-
level political patron that it can call on in times of
political trouble. (Note: In contrast, Caijing is
widely known to have high-level political protection
through the connections of its CEO and Editor-in-
chief, Wang Boming, son of Party veteran and former
Vice Foreign Minister Wang Bingnan.) Zhao emphasized
that the paper takes pains to avoid reliance on any
Party or government entities, and both stressed that
the paper's editorials are written by its own staff
rather than parroting language from propaganda
authorities. (Note: He Li stressed in 2003 that the
paper made a point of using non-ideological language
in place of the "Xinhua-ese" of Party media.)


9. (C) Moreover, current Editor-in-chief Liu
explained, the normal political control mechanisms are
absent from the paper. For example, unlike Party-
affiliated media outlets, the paper has no Communist
Party committee and there is no requirement that the
editor-in-chief be a Party member. Although Liu's
predecessor was a Party member, Liu is not, and
meetings held by employees with Party membership do
not influence the paper's editorial direction.
Although these arrangements and the paper's technical
status as a Shandong provincial publication do not
protect the Observer from oversight by propaganda
authorities, it is insulated somewhat from national-
level propaganda officials. Even though the Observer
essentially operates as a Beijing-based, national
newspaper, it answers to propaganda officials of the
Shandong Provincial Communist Party Committee, which

BEIJING 00007409 003 OF 004


means central officials must route criticism of the
paper through the provincial-level authorities.

Negative News Permitted, But Not About Shandong
-------------- --


10. (C) The paper's unique ownership structure and
nominal status as a "local paper" confer some
advantages, but Liu said he must still tread
carefully. First and foremost, the Observer cannot
report negative news about Shandong Province itself.
For example, Liu told PolOffs, Shandong officials
strictly forbade the paper from reporting on the death
toll from July 2007 flooding in Shandong's capital
Jinan. Zhao said the paper can only report negative
stories that are restricted to the county level or
below (and then only when occurring outside of
Shandong Province) and generally avoids stories that
highlight systemic problems at the central or
provincial levels. Liu cited recent examples of
negative news that the paper has successfully
reported: a recent lottery cheating scandal in
Anshan, Liaoning Province, and allegations that
medical equipment salespeople for General Electric
were giving improper gifts to some government
officials in Guangdong Province.


11. (C) Zhao recounted especially strict limits on
recent coverage of sensitive national and
international news. Press guidance on the mid-October
Party Congress was so strict Zhao felt that coverage
would be "meaningless" and wanted to skip coverage
altogether (ref A). In the end, the paper ran some
Xinhua copy in response to pressure from Shandong
authorities along with its own editorial. Similarly,
restrictive propaganda guidance on how to spin the
recent demonstrations in Burma meant that the paper,
aside from the question of Burma's relevance to its
readers, could not offer unique insights or provide
new information. It prefers to report nothing in such
cases rather than run pre-packaged Xinhua copy (ref
B).


12. (C) Although Zhao was guardedly optimistic on the
future of Chinese media, he said the market-oriented
media reforms of recent years can only go so far
without more press freedom. Stories about the bad
construction of bridges or other local problems were a
new development at the beginning of media reform, but
readers get tired of that. The only way to continue
attracting readers is to push the envelope, but, Zhao
complained, under current restrictions there is no way
to expand coverage.

Political Agenda: Incremental, Constructive Change
-------------- --------------


13. (C) Despite these constraints on news coverage and
the Observer's strong economic focus, the paper enjoys
a reputation for provocative social commentary and
understated promotion of political change. The
paper's motto, "rational and constructive (lixing,
jianshexing)," is printed prominently on its masthead
and, according to Zhao Li, encapsulates the paper's
style of advocating positive change while avoiding
direct confrontation with the Government. As He Li
put it in 2003, "we don't do revolution." He Li said
that "constructive" means to encourage, not criticize,
the Party by spinning an issue so that it goes beyond
the Party's intended meaning. He gave the example of
an Observer editorial in 2003 that complimented the
Ministry of Public Security for making it easier for
citizens to acquire passports and then praising the
decision as an example of political reform. He Li
compared this approach to the more explicit style of
Southern Weekend, a provocative news and commentary
weekly published by the Guangdong Provincial Party
Committee.


14. (C) Recently, the Observer has weighed in on the
side of Party reformers doing ideological combat with
China's "Leftists" (orthodox Marxist ideologues). In
March of this year, for example, the Observer
published a front-page editorial entitled "Let Us
Begin to Talk More About Democracy," which selectively
quoted from Deng Xiaoping and current Party leaders to
argue that the true manifestation of successful
modernization is a democratic political system. The
timing of the article coincided with an intense
ideological debate emerging in Party circles in the
run-up to the 17th Party Congress in October. In

BEIJING 00007409 004 OF 004


July, the paper published a hard-hitting article
sharply critical of a law restricting media coverage
of disasters, stating that press rights originate in
freedom of speech and that the "public's right to
know" will sustain the greatest harm from the law. In
July 2006, the paper ran a barely disguised attack on
contemporary Leftist opponents of reform by Deputy
Editor Zhong Weizhi along with a provocative interview
with former People's Daily senior editor Ma Licheng.
Ma revisited the controversy surrounding his 1998
book, "The Clash of Swords? (Jiaofeng),which
described then-Party chief Jiang Zemin's ideological
struggle against the Left after the death of Deng
Xiaoping. Ma (protect) told PolOffs that the
interview and Zhong's commentary were intended to
defend Party reformers against a scathing criticism of
market-oriented policies launched by hardline Marxist
opponents of reform in advance of the Party's November
2006 6th Plenum which focused on ideological issues.
Deputy Editor Zhong, according to Ma, is a well-known
member of the Party's "reform faction" (gaige pai)
"hated" by Leftists for his aggressive promotion of
liberal ideas.

Learning Curve: Dodging Political Trouble
--------------


15. (C) Zhao and others learned the hard way that
pushing too far beyond the Party's red lines on media
content can be costly. Although Zhao said he
generally can sense where the lines are, he and then-
editor He Li nearly brought the paper to ruin in June

2003. The paper sharply criticized Deputy Health
Minister Gao Qiang for publicly defending the
performance of former Health Minister Zhang Wenkang,
who had just been sacked for covering up the SARS
outbreak. According to He Li, the paper published a
piece juxtaposing the Party's earlier statements
criticizing Zhang alongside Gao's defense of the
sacked official. This direct criticism of a sitting
official crossed the line. Zhao said he and other top
managers were forced to travel to Shandong and make
"self criticisms" before propaganda authorities. (He
Li in 2003 told PolOffs the self-criticism session was
severe, part of a broader crackdown on media that
endangered the paper's existence.) A less serious
incident occurred in 2005 when the China National
Offshore Oil Corporation was attempting to purchase
Unocal. Liu said central government officials were
angered by an Observer editorial that was mildly
critical of the Chinese government's role in the ill-
fated deal.


16. (C) Zhao said he learned that the paper can make
"small mistakes" (xiao maobing) without serious
consequences but cannot afford another big mistake
like the 2003 SARS article, which could lead to
propaganda authorities shutting down the paper. Thus
Zhao explained that the Observer's management must
constantly walk the line between protecting the
business and pushing the envelope enough to attract
and retain readers. When the Observer strikes a
critical tone, it is generally in the less-sensitive
realm of business and economics. For example, an
editorial in the November 12 edition throws cold water
on PetroChina's recent rise to become the world's
largest corporation by market value. PetroChina's
sky-high value is the result of a worrisome stock
market bubble and the continued domination of
monopolies at the expense of consumers, the editorial
says.

Comment
--------------


17. (C) The Economic Observer appears to be succeeding
commercially in an increasingly competitive Chinese
newspaper market. While the Observer takes some
risks, it is not as politically daring as the
privately-owned Caijing magazine, or even the Party-
owned Southern Weekend. As executives in a for-profit
business, the paper's managers and editors seem to
view self-censorship and avoiding government
punishment as part of their fiduciary responsibility
to the Sanlian Group and as the most effective way to
continue pursuing their quiet agenda of media reform
and political change.
RANDT