The Wall Street Journal and the Washington Post have both run interesting follow-up articles analyzing Xinhua's new regulations on foreign media content. The consensus is that, really, it's all about the money, and the political justifications are a fig leaf for helping Xinhua shore up its creaking business. The Wall Street Journal's Andrew Browne writes (subscription):
The move amounts to a Xinhua land grab in the nation's quickly expanding market for financial news and information, making clear that it wants to limit the expansion of economic-news vendors such as Reuters Group PLC, Bloomberg LP and Dow Jones & Co. -- and eventually take over their business.

Xinhua, a behemoth of 13,000 employees with reporters around the world, also reasserted its traditional control over what information the Chinese general public can read, imposing new restrictions on foreign-news content entering China. Foreign general newswires, as distinct from economic-news vendors, have never been allowed to sell directly to domestic publications and must already go through Xinhua.

In an interview, an official of the Xinhua subsidiary that foreign economic-news vendors would be required to use as their sales agent in China said fees will be part of negotiations with the vendors. The annual revenue of all foreign-information suppliers in China is estimated at $100 million.

***

Mr. Tian [Congming, head of Xinhua, and a Central Committee member] has made no secret of his ambition to reverse-engineer foreign financial-information products -- take them apart, study them and then make a copy -- so that Xinhua can dislodge the foreign competition.

Xinhua doesn't hold all the cards in its challenge to the foreign media. Western media executives with long experience regarding Xinhua describe the agency as a cumbersome bureaucracy riven by political infighting. And, they say, its quasimonopoly as a distributor of foreign news coming into China is under threat with the growth of the Internet.

"Xinhua feels like it's losing its grip and its privileged revenue streams," says David Wolf, president of Wolf Group Asia Ltd., a Beijing-based media and technology consultancy. "In an ideal world, they'd love for Reuters and Bloomberg to go away. In the near-term, they'll be satisfied with control."

The new rules will force international news organizations to sell their financial products in China through the China Economic Information Service, a Xinhua subsidiary that seeks commercial opportunities for the agency. The information service is the business partner of Xinhua Finance, a Tokyo-listed news and financial-information company run by U.S. businesswoman Fredy Bush.

In the Washington Post, Maureen Fan compares the reactions of journalist and human rights organizations, such as Reporters Sans Frontieres and the Committee to Protect Journalists, with those of people analyzing the business motivations. She speaks to former Wall Street Journal Beijing Bureau chief turned business consultant and author Jim MacGregor (as does Andrew Browne):
Chinese journalists and experts said the rules merely reflect existing conditions. Foreign media companies have long been banned from selling general news services directly to Chinese media. Financial news, however, has up until now been sold directly to Chinese banks and brokerages, which depend on the data to make market trades. It is this multimillion-dollar market that the New China News Agency, known here as Xinhua, is targeting, experts said.

"The news that goes into newspapers in China is already controlled, and already goes out through Xinhua," said James McGregor, who was chief executive of Dow Jones's China business operations when Xinhua first tried to regulate foreign news services in 1996. "They're trying to take over the financial information business in China. They want to make the money instead of the foreigners. This is not a control issue -- they already have control. This is a money issue."

The new rules, if enforced as currently stated, will give the New China News Agency a virtual monopoly for distribution of all news, information and data from foreign news agencies in China. The directive is the same as one that McGregor and the Reuters news agency successfully fought 10 years ago. The move effectively shuts out agencies including the Associated Press and Bloomberg at a time when China's growing financial markets increasingly depend on the latest economic data available worldwide.

McGregor, now chief executive of J.L. McGregor & Company, a China-focused research, advisory and investment firm, said the new rules would hamper Chinese traders who have no interest in censored news filtered by the New China News Agency.

"This is bad for China," McGregor said. "It doesn't matter if it's politically sensitive news or a rumor, it's information that can move markets. That's valuable to Chinese traders as well. They need the same information as everybody else. When China sneezes, the world's commodity markets get pneumonia."

I find this situation interesting because it reveals the conflicts between China's national ambitions, and says a lot about how different national agendas can advance or recede based upon who is advocating for them within the government and what their power base is. China aspires to build real financial markets (as opposed to the volatile punt-o-ramas it has now) and to turn Shanghai into a global financial center. But it also aspires to make Xinhua a global financial information powerhouse. Satisfying Xinhua's ambitions seems to require doing things that are at odds with constructing real financial markets or building real financial capitals, which rely on the rapid flow of financial and general information. As long as Xinhua is part regulator and part state news service, its financial information services will always be greeted with suspicion, even if they are kept at a distance from the rest of the Xinhua organization.

Related:
Olympic journalists, don't panic. The Foreign Ministry swears this won't hinder your work.
Looks like Wen Jiabao picked the wrong time to quit drinking visit the United Kingdom.
If you haven't, you really, really need to read my ex-colleague David Wolf's post on this topic at Silicon Hutong.

Updates: