CHINA’S CULTURA INDUSTRIES IN THE FACE OF TRADE LIBERALIZATION: AN ANALYTICAL FRAMEWORK OF CHINA’S CULTURAL POLICY
Thesis
Presented in Partial Fulfillment of the Requirement for the Degree Master of Arts in the Graduate School of the Ohio State University
By
Xiaolu Chen, B.Econ. Graduate Program in Arts Policy and Administration
The Ohio State University 2009
Thesis Committee: Margaret Wyszomirski, Advisor Wayne Lawson
Copyright by Xiaolu Chen 2009
ABSTRACT
The distinctive characteristics of cultural products have caused considerable on-going international debate on free trade. Should cultural goods be treated just like other commodities or should they be protected for the sake of cultural diversity? This article explores the rationale of the cultural exception strategy underlying the discourse of free trade negotiation, with particular attention to the case of China's cultural industries, in which cultural goods and products have received special treatment compared to other commodities. By analyzing the specific commitment made by China in WTO agreements, and framing up the measures that have been utilized by Chinese policymakers to promote cultural industries, this study addresses two major questions: how did the
Chinese government construct and adjust its cultural industrial polices in the face of WTO entry and free-trade negotiation? And what factors have prompted the Chinese government to fashion its cultural industrial policy into its current shape?
The result of the research shows that China has taken a paradoxical position with regard to the cultural industries: on one hand, the Chinese government has pursued ambitious policies to support the development of cultural
ii industries as part of a more general interest in promoting economic growth.
On the other hand, the Chinese administration remains reluctant to open up its domestic cultural markets to global competition, which to certain degree restricts the development of China’s cultural industries. To explore the cause of the paradox in China’s cultural industries, the study draws on Kingdon’s policy window model to frame up China’s cultural industrial policy development through three streams: 1) problem stream, 2) policy stream, 3) politics stream. Based on Kingdon’s model, the researcher presents an analytical framework for China’s cultural industrial policies, which reveals that the current shape of China’s cultural industries and cultural policies is an outcome of the transitional nature of the Chinese society. In the end a new phase of China’s cultural industrialization will be introduced, predicting challenges and opportunities that could affect the future development of
China’s cultural industries.
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ACKNOWLEDGEMENTS
I would like to thank my advisor and mentor Dr. Margaret Wyszomirski for her intellectual support, continuous encouragement, and tremendous patience in helping and guiding me throughout the creation of this paper. She is like a family member to me during my two years of graduate study, and I am grateful for all the countless care and support that she has given to me. I also would like to thank the other member of my master’s examination committee, Dr. Wayne Lawson, who has been a generous source of guidance and inspirations during my study.
I want to thank all the staff members at the Department of Art Education,
Kirsten Thomas, Holly Longfellow, and Rosemary Thornton, for their continuous help and support.
Finally, I wish to thank my family and friends who have always been there for me. Without their support, every step of the way could have been much harder.
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VITA
December 11, 1984…………………….Born – Chaozhou, China
2007…………………………………… B. Econ. International Economics and Trade, University of International Relations
2007 – present………………………… Barrnett Fellow, Department of Arts Education, Ohio State University
FIELD OF STUDY
Major Field: Arts Policy and Administration
Minor Field: Theatre and Performance
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TABLE OF CONTENTS
Abstract………………………………………………………………………………. ii
Acknowledgements………………………………………………………………….. iv
Vita…………………………………………………………………………………… v
List of Tables………………………………………………………………………..viii
List of Figures…...……………………………………………………………………ix
Chapters 1. The research problem and purpose of study: China’s rising cultural industries in the face of globalization…………………………………………………………...1
2. Cultural industry as new engine for economic growth and the discussion of cultural exception in global free trade negotiations: a review of literature……...10
2.1 A brief definition of cultural industry………………………………………. 10 2.2 China’s cultural industries: an overview…………………………………….12 2.3 Cultural exception or free trade in cultural industries: a global debate……...18 2.4 Policy formation process and Kingdon’s policy window model…………….28 2.5 The multiplexity of China’s cultural industries and Kingdon’s model………39
3. Methodology, analytical framework and design of the study……………………43
4. The Paradox of China’s cultural industrial policies: cultural exception and cultural ambition………………………………………………………………………….48
4.1 Cultural exception versus cultural ambition ………………………………...49 4.2 The paradox of China’s cultural industrial policies………………………….63
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5. China’s cultural policy formation and cultural industrialization: an analytic framework………………………………………………………………………..68
5.1 The problem stream: the pressing demand of global harmonization………...70 5.2 The political stream: approving for cultural industrialization……………….72 5.3 The policy stream: reshaping the cultural landscape……………………...... 76 5.4 The coupling effect: The map of cultural industrialization………………….84
6. The new phase of cultural industrialization: China’s cultural industries in the twenty-first century………………………………………………………………87
6.1 The reconfiguration phase of cultural industrialization……………………...88 6.2 Other opportunities and challenges of the new phase………………………..95 6.3 Conclusion………………………………………………………………….102
References…………………………………………………………………………..105
vii
LIST OF TABLES
Table 1: Major arguments of cultural exceptionists and trade liberalists…………. 30
Table 2: China’s WTO commitments in audiovisual services……………………. 57
viii
LIST OF FIGURES
Figure 1: The classification of China’s cultural and related industries……………. 13
Figure 2: A working analytical framework of China’s cultural policy formation and
cultural industrialization………………………………………………….69
Figure3: The policy stream components……………………………………………77
Figure 4: The two phases of China’s cultural industrialization…………………….90
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CHAPTER 1
THE RESEARCH PROBLEM AND PURPOSE OF THE STUDY: CHINA’S
RISING CULTURAL INDUSTRIES IN THE FACE OF GLOBALIZATION
Background to the Problem
On December 11, 2001, after a series of complicated and arduous negotiations that last more than 15 years, China finally reached the destination of its long march and acceded to membership in the global trade body, the World Trade Organization. This historic event became a representative milestone for the Reform and Open-up Policies that China has been undertaking for nearly thirty years. It also reflects the country’s rejection of autarky and determination of resurgence through the mechanism of market economy. Due to the government’s persistent efforts to reform the economic system and open up the borders to foreign trade and investment, China’s general economy has been performing outstandingly and the country’s Gross Domestic
Product (GDP) has remained at a high growth rate since the commencement of the program. The “socialist market economy”, a term that has been used a lot in official documents of the Chinese government and the Communist Party of China (CPC), was
1 proved to be a feasible approach so far to improve the prosperity of the country and the welfare of people.
As China’s economy develops and people’s living standards jump to a new high level, important changes happened in people’s consumption habits, mainly derived from the increasing amount of leisure time and disposable income. As a result, material needs of the population decrease, while spiritual and cultural needs increase, creating strong demand of cultural goods and products in the market. This increasing demand of cultural products and its accompanying demand to build up industrial capacity to satisfy these needs moved onto the policy agenda and become one of the recent focuses of the Chinese government. In the 2004 Report on the Work of the
Government, Premier Wen Jiabao stated:
The people’s intellectual and cultural needs are constantly increasing along
with economic development and social progress in China, so we must attach
greater importance to cultural development. It is necessary to energetically
develop an advanced socialist culture. (Wen, Report on Work of the
Government (2004), 2004)
In order to develop a so-called “socialist culture”, the Chinese government has utilized many measures to achieve its goal. From the historic approach of
“making culture as an undertaking”, to the more recent approach of cultural industrialization, the Chinese culture has moved along with the ups and downs of the Chinese political and economic reforms. Certainly, the development of such
2 “an advanced socialist culture” is no simple task, especially at an age when globalization is penetrating into many aspects of life including economy, politics, and culture, through incessant breakthroughs from the field of science and technologies, as well as the development of a more powerful international trading regime. The issue of building a “socialist culture” in a more global world is generating more concerns especially after China’s landmark WTO entry.
Now in the Post-WTO age, the Chinese culture is facing even more difficult challenges from the outside world. Foreign cultural products, usually believed to be embedded with western values and ideas, might possibly storm onto the land of China, and exert enormous impact on Chinese culture. The question has come in front of the Chinese policymakers: should the cultural industries be exempted from free trade agreements to protect the distinctiveness of a Chinese culture from the erosive influence of other cultures and values, or should the cultural markets be opened up to face rigorous international competitions that might speed up the restructuring of the cultural system and improve people’s well- being through a richer menu of choices in cultural products? What position has the Chinese government taken in its WTO agreements, and what kind of cultural policies has China taken towards its cultural industries in the face of globalization? How can one explain the formation of China’s current cultural industrial policies? What implication could the entry of WTO mean for China’s culture and cultural industries?
3 Purpose of the Study
To answer the aforementioned questions, this study first will conduct a close investigation on the part of China’s WTO agreements that concerns cultural industries, revealing the stance that China has taken in global free trade negotiations. Then the study will seek to develop an analytical model that could be used to solve three major issues: 1) to give out a clear depiction of China’s cultural industrial policies. As cultural policy covers a wide range of topics, this study simply focuses on polices that are affecting China’s cultural industries, 2) to use a policy formation model to discover and reveal the fundamental factors that contribute to the initiation and development of these cultural policies, linking the formation of China’s cultural policies with other contemporary social, political and economic circumstances in China, 3) to provide future implication and indication for China’s cultural polices and industrial changes. This cultural policy model of China will not only serve as an analytical framework to explain the origin and development of China’s current cultural policies, but will as well serve as an indicator for future changes along with the development of China’s cultural industries and development of international cultural exception and diversity discussion.
Theoretic Framework
In order to build up an analytical model to analyze China’s foreign cultural industrial policies, three bodies of literature need to be examined. The first is an
4 overview of the Chinese cultural industries, which could serve as a basis for later discussions on cultural policies. This part of literature review will give a general introduction about China’s cultural industries through different perspectives including economic, political, social, and global ones that collectively depict a holistic picture on China’s cultural industries. Second, it is important to review the international debate on certain cultural trade policy strategies such as cultural exception and cultural diversity claims that have been going along with the negotiation of trade liberalization. This part of examination could put the case of
China’s cultural policies into a global context and track down how some international considerations have influenced China’s approach to foreign cultural polices, especially before and after its WTO entry. Third, because the analytical model to analyze China’s cultural industries and policies formation is based upon
Kingdon’s policy window model as a construct, it would be important to take a close-up view on Kingdon’s model, understanding its theoretical components which could be adjusted to fit into China’s cultural policy analysis and special circumstances. As a result, the researcher will establish an analytical framework of cultural policy for this study upon the aforementioned bodies of literature.
Significance of Study
Because China’s market economy history only has a short span of 30 years since
China initiated the grand transition from planned economy system to market economy system in 1978, many sectors of China’s economic structure have their
5 own special characteristics that distinguished them from their counterparts in a pure market economy system. Among these different sectors of economy are the
Chinese cultural industries. Similar to the general economy’s transition from plan to market system, the Chinese cultural industries are undergoing a huge shift from cause to industry, which is a subsequent result of the systematic change. This specific nature requires that any approach to analyze China’s cultural industries should be adjusted accordingly to fit into China’s special nature of economy. Bearing in mind with such considerations, the researcher seeks to construct a working theoretical framework to explain the origin and development of China’s cultural policies, and their direct influences upon the rise of China’s cultural industries. The model will take into consideration China’s specific circumstances, while at the same time putting the Chinese cultural industries under the international context, especially the trade liberalization negotiation surrounding around the newly developed cultural industries.
Such an approach contains two major advantages: the first is that it provides a holistic view on China’s cultural industrialization policies. In fact, there are two major forces that form the current shape of China’s cultural industries. The first one is comprised of domestic factors including political, economic, and social changes that exert huge impact on China’s cultural industries. The second force is from the international environment, and comprised of factors such as the transfer of cultural or creative policies, the demand to free up cultural markets in
WTO and trade liberalization talks, etc. These two forces together contribute to
6 the shaping of China’s cultural industries and policies, and by studying them we could have a whole picture of China’s cultural industries and understand the interactions between these forces that LED the Chinese government to take up its paradoxical position in its cultural policies.
The second contribution of this study is that through using Kingdon’s policy window model as a theoretic basis to analyze China’s cultural policy formation, it provides a new way of interpreting China’s current cultural policies. In order to change the view that China’s policies are mainly formed by a group of communist theorists in a “secret” room, this study draws on a particular western political policy formation model and adjusts it to fit into China’s specific circumstances, revealing multiple factors that play a role in the shaping of
China’s cultural policies. This approach could help disclose the somehow mysterious and complicated process of China’s cultural policy formation and the shaping of China’s cultural industries. Meanwhile, the application of a western policy model on a centralized and one-party Chinese political system, sheds new light on China’s cultural industries and policies in that it captures and reveals the struggle resulted from the transition between cultural cause to cultural industries, which is embedded in a greater transition from a planned economy system to market economy system.
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Chapter Overview
Chapter two examines in detail the theoretical framework outlining the structure of the study with a full review of literature including a general introduction of
China’s cultural industries, an investigation of the international discussion on cultural exception and cultural diversity during trade liberalization negotiations, a detailed analysis on Kingdon’s policy window model to see how it could be modified to fit into the context of China’s cultural policy formation. Chapter three provides a closed look at the design of the study and how the research methodology is applied. Then chapter four will examine the specific cultural industrial commitments that China has made in its WTO agreement, attempting to give an interpretation of these commitments. And through a close study of domestic cultural polices that exert impact on the development of cultural industries, the chapter will track down the domestic forces that contribute to the formation of cultural polices. The juxtaposition of the domestic and foreign cultural policies reveals a paradoxical position that China has taken on its cultural industries in the face of globalization and trade liberalization. In chapter five, an analytical framework based on Kingdon’s policy window model would be used to analyze China’s cultural policies, answering the question of why the
Chinese government has taken its current position towards cultural industries. In the last chapter, the researcher will introduce a new phase of China’s cultural
8 industrialization, identifying possible challenges and opportunities for the development of cultural industries in the new phase.
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CHAPTER 2
CULTURAL INDUSTRY AS NEW ENGINE FOR ECONOMIC GROWTH AND
THE DISCUSSION OF CULTURAL EXCEPTION IN GLOBAL FREE TRADE
NEGOTIATIONS: A REVIEW OF LITERATURE
2.1 A Brief Definition of Cultural Industries
Although cultural industries have attracted broad attention in China in recent years, the term “culture industry” has a much longer history. It was coined by German
Frankfurt theorists Theodor Adorno and Max Horkheime in their famous paper: The
Culture Industry: Enlightenment as Mass Deception (1944), which criticizes the negative influences of popular culture consumption. Drawing on their experience of fascist and totalitarian regime approaches to cultural policy during World War II era,
Adorno and Horkheime perceived the mass-produced culture not only as a danger to the high arts, but also a threat to positive psychological needs such as freedom, creativity, or genuine happiness. Although the two German scholars created the term for the purpose of criticism, it probably never occurred to them that their coinage might become a buzzword for new economic development in another century.
According to the definition of UNESCO, cultural industries refer to industries that
“combine the creation, production, and commercialization of contents which are
10 intangible and cultural in nature”, and generally include “printing, publishing and multimedia, audio-visual, phonographic and cinematographic productions, as well as crafts and design”1. This list might vary across countries as some countries might include architecture, visual and performing arts, sports, cultural tourism, etc. Cultural industries are sometimes referred to as creative industries as well since they cover very similar segments within the economy. In this study, the definition of UNESCO will be used as the primary reference for cultural industry when discussing about cultural trade, because it is more inclusive and allows variations between countries, making it more suitable for discussion on international cultural trade. China’s own definition of cultural industry is similar to the UNESCO’s definition, and its own classification will be used when the specific case of China’s cultural industries is concerned (See Next Section).
During the last decade of twentieth century, the world has witnessed cultural industries grew and expanded exponentially, gradually having a greater impact on overall economic development, in terms of both employment and GDP contribution.
Cultural industries appear to have become a new potential economic driver in the new century. Meanwhile, because the specific nature of cultural industries, the cultural sector contains in addition to its industrial aspect a cultural aspect that makes it distinct from other traditional industries. The cultural aspect of cultural industries requires countries to preserve their cultural identity and social coherence when
1 http://portal.unesco.org/culture/en/ev.php- URL_ID=18668&URL_DO=DO_TOPIC&URL_SECTION=201.html
11 developing their cultural industries, especially with the growing prospect of cultural homogenization caused by globalization (Knight, 2006). The cultural aspect of cultural industry is facing more and more challenges around the world along with the deepening process of international economic integration. Similarly, China’s cultural policymakers confront this issue as they strive to maintain a balance between the cultural and economic side of cultural industries.
2.2 China’s Cultural Industries: An Overview
In China, the term “cultural industry” is officially adopted by the national and provincial governments, although some municipal governments of big cities such as
Beijing and Shanghai used the term “creative industry” in their urban development plans. In 2004, the National Bureau of Statistics of China released the first official classification of cultural industries in China – The Notice on Cultural and Related
Industries Classification. According to the notice, cultural industry is defined as “the aggregation of activities and related activities that aim to provide to the public with cultural entertainment products and services”2. According to this definition, the cultural industries are divided into 9 segments: 1) news service, 2) publishing and copyright services, 3) radio, television and film services, 4) arts and cultural services,
5) online cultural services, 6) leisure and recreational services, 7) other cultural services, 8) manufacture of cultural product, equipment and related products, 9) sales of cultural product, equipment and related products. These 9 segments are grouped
2 http://www.stats.gov.cn/tjbz/hyflbz/xgwj/t20040518_402154090.htm
12 into 3 levels: the core level, peripheral level, and related level (See Figure 1. The
Classification of China’s Cultural Industries). The three levels have different focuses.
The core level mainly refers to cultural industries in a traditional sense, including visual and performing arts, audiovisual products, publishing, printing, etc. The peripheral included segments of the cultural industries that were mainly developed after the reform policy and the cultural industrialization that basically started in 1978.
The related level is more focused on the supporting segments of the industries including equipment manufacture, cultural services, etc.
• 8) manufacture of cultural product, equipment and related products Related Leve • 9) sales of cultural product, equipment and related productsl
• 5) online cultural services Peripheral Level • 6) leisure and recreational services • 7) other cultural services
• 1) news service • 2) publishing and copyright services Core Level • 3) radio, television and film services • 4) arts and cultural services
Figure 1: The Classification of China’s Cultural and Related Industries3. Source: National Bureau of Statistics, China, 2004
3 other cultural services include: cultural and arts commissioning; cultural and arts products renting and auctioning; and advertising and expo services.
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2.2.1 The Historical Background of China’s Cultural Industries
The official history of China’s cultural industries is a short one, one much shorter than its European and U.S counterparts. This is no surprise regarding the unusual route that China has taken in its economic development. Unlike the United States and other European countries, where the development of cultural industries followed a natural path mainly shaped by the forces of the market economy, China’s cultural industries and its current shape are more of the product of drastic political actions and economic reform. From the establishment of the People’s Republic of China in 1949 to 1978 when the political and economic reform and opening-up program began, the
Chinese society had undergone almost thirty years of political movements and chaos, and the culture was tightly controlled by the Communist Party of China (CPC) and government to ensure that any cultural activities and programs were created to serve the interests of socialism. Under the previous planned economic system, great ideological significance was attached to culture, which was seldom related to economic development. It was widely believed that culture was another form of ideology and should be carefully manipulated to maintain social and political harmony. The idea of commercial culture was seriously criticized and viewed as a decadency of capitalism (Zou & Xu, 2006). Such opinions towards culture mirrored the Frankfurt School’s criticism on culture industries that commoditized culture was
14 empty and superficial, and had lost its capacity to serve as the special and exceptional forms of human creativity (Adorno & Horkheime, 1947).
However, the negative view on the economic value of culture has gradually adjusted and reversed after China’s reform and opening-up began in 1978, and cultural public service units (CPSU), the major public service organizations that provided cultural service at that time, were allowed to engage in business activities, resulting in the emergence of a “dual system” of cultural undertaking (or cultural institutions) and cultural industries (Xiaoming, 2006). Meanwhile, as cultural industry as a sector of the economy received more favorable attitudes internationally, and its potential capacity to generate economic values was discovered. Subsequently Chinese leaders soon noticed a need to readjust their view and approach towards culture.
Before 1978, due to the special political environment and long years of planned economy, culture was normally considered as shiye - a cause and an undertaking, which could create social values such as national integrity, social cohesion, and ensure political correctness. Through state-owned cultural institutions (mainly in the form of public service work unit), the government took all responsibility upon itself for “cultural construction” through creating arts and cultural programs, distributing cultural goods, subsidizing nonprofit arts organizations. In other words, the government was “not only the player, but also the referee”. However, such a government position in the culture realm is no longer compatible to China’s general economic reform in the big context. Along with the deepening of reform of the
15 economic system, some concerns and issues that have appeared in the economic realm also appeared in the cultural realm. The underlying logic maintains that as long as the approach of market economy is recognized and hailed, cultural goods and cultural services will inevitably be incorporated into part of the market economy, and the motivation to seek for profits, which is natural in the economic realm, will undoubtedly appear in the cultural realm (Pan, 2006). Therefore, similar to what happened before in the reform in the highly centralized planned economic system, the weakness and deficiency of the original cultural system were all exposed to the daylight. The original cultural structure and system failed to come in line with the
“new” market economy in China, and were thus unable to answer the need for cultural development. In response to these issues, China’s authorities soon recognized this incompatibility, and responded with proactive measures to change the situation.
As a result, the long and arduous process of transformation from cultural undertaking to cultural industries started not long after the general reform began, and continues to reshape the landscape of China’s cultural industries till today.
2.2.2 The Economic Performance of China’s Cultural Industries
Although born as a hybrid of cultural institution and industry, China’s cultural industries exhibit great potential in their economic performances and have enjoyed very rapid growth. In 2007, the National Bureau of Statistics (NBS) published an estimation report on the development of China’s cultural and related industries: 2006
China’s Cultural and Related Industries Estimate Report. According to preliminary
16 calculation presented in the report: China’s cultural industries have realized an added value of 512.3 billion RMB in the year 2006, an increase of 17.1 percent over 2005, which was 6.4 percent higher than the GDP growth rate and 6.8 percent higher than the tertiary industry growth of the same period. In addition, cultural industries have contributed a 3.41 percent to the GDP growth rate, pulling GDP growth 0.36 percentage points. According to this estimates, the cultural industries in 2006 accounted for a 2.45 percent of the total GDP, an increase of 0.3 percentage points over 2004. Also, there were 11.32 million cultural industry practitioners in the whole country, accounting for 1.48 percent of the employment, with a 4.0 percent in urban areas.
In terms of cultural consumption, the Chinese market also exhibits fast-growing demand for cultural products and services along with the steady rising of people’s living standard. According to the Annual Report on China’s Cultural Industries 2008
(Jiang & Gu, 2008), China's urban disposable income per capita has reached 11,759
Yuan ($1721.5) in 2006. The expenditure per capita on the consumption of cultural and recreational services is 591.1 Yuan ($86.5), an increase of 65 Yuan ($9.5) than the previous year. Meanwhile, the net income per capita of China’s rural residents reached 3,587 Yuan ($525.1), and expenditure per capita on cultural, educational, entertainment, supplies and services was 305.13 Yuan ($44.7), an increase of 10
Yuan ($1.5). Based on these data from the National Bureau of Statistics (NBS), Jiang and Gu made an estimation that in 2006 the national expenditure on culture
17 consumption amounts to the total of 570 billion Yuan ($83.45 billion), an increase of
80 billion Yuan ($11.7 billion), which was 18% higher than the previous year.
In the area of cultural trade, the post-WTO era (post-2001) has witnessed an impressive growth. In the fourth China’s Cultural Development Strategy Forum this year, the Central Propaganda Department of the CPC issued the 2008 Annual Report on China’s Reform of Cultural System (Central Propaganda Department of the
Communist Party of China), which showed that “China’s cultural trade deficit has been gradually reversed; the ratio of book copyright trade deficit has narrowed from
2005’s 15:1 to 4:1 in 2007, and the number of China’s exported films has reached a historic high of 78, sold to 47 countries and regions, generating a revenue of 2.02 billion Yuan. During the same forum, the Department of Trade in Service under the
Ministry of Commerce published another report for China’s cultural trade: Annual
Statistic Report on China's Import and Export of Cultural Products and Services
2008(Department of Trade in Service; Ministry of Commerce). The report shows that in 2007, the core of China's import and export of cultural products amounted to 12.92 billion U.S. dollars, up 26.6 per cent growth than in 2006, and is 3.7 times of the 2001 amount. Cultural services imports and exports amounted to 3.72 billion U.S. dollars, an increase of 39.9 per cent over 2006, which is 6.1 times that of 2001.
2.3 Cultural Exception or Free Trade in Cultural Industries: A Global Debate
The globalization of cultural industries and the increasing flow of cultural products and services across national borders have continued to get on the nerves of cultural
18 policymakers in many countries. Unlike other goods that have received lower and lower tariffs and ongoing reduction of protective measures, foreign cultural goods and services, have seen more of vigilant eyes and ‘unfriendly” protective measures in many countries at a time when international economic integration is striding on its path. Meanwhile, in domestic markets, cultural industries have moved closer to the center of economic actions in many countries. These two simultaneous phenomena stand in strong contrast to each other, and the issue of cultural industries began to crop up in different international and regional trade negotiations during the 1990s.
The term cultural exception was created under such a big context and used by governments as a strategy in trade negotiations. The main idea of cultural exception is that some form of protection of domestic cultural industries should be allowed, in contrast to other industries in which protective measures are prohibited, thus making the cultural industries an exception to trade liberalization.
The most notable cases of cultural exception in international trade negotiations history are in the negotiation of the Canada – U.S. Free Trade Agreement (CUSFTA) and the Uruguay round of the General Agreement on Tariffs and Trade. The Canadian government insisted on bringing the “cultural exception” clause into the CUSFTA, in which they declare that cultural industries – film, television, and radio broadcasting; periodical and book publishing, video and sound recording were not on the negotiating table and should be excluded in the agreement. The Canadian threatened that they would not sign the entire agreement unless the cultural industries were
19 excluded. In the later North American Free Trade Agreement (NAFTA), despite U.S. efforts to reopen the issue, cultural industries retained the negotiated exemption in the
NAFTA.
Echoing the Canadian position, the European Union (EU), led by France, insisted that audiovisual industries be excluded from the GATT during the Uruguay round. With the deadline looming and in order not to jeopardize the entire agreement, the
Europeans and the Americans “agreed to disagree” (Goff, 2007), and as a result audiovisual industries were left out of the final treaty. During these trade negotiations, the United States expressed strong oppositions to the cultural exception, arguing that such an exception limited their market access and contravened the prevailing norms of open trade. Standing as the world’s largest cultural exporter, the protective measures taken by Canada and EU in their domestic cultural market would certainly hurt the U.S.’s existing interests. However strongly the U.S. objected to the cultural exception strategy, its wishes did not prevail, and cultural industries did maintain an exception in these trade agreements.
2.3.1 The Proponents of Cultural Exception
In classic economic analysis, the economic imperative driving the global trading regime towards trade liberalization is based on the simple economic principle that free trade can maximize world welfare. The Ricardian model has theoretically and empirically proved that comparative advantages will promote specialization in production in different countries and result in mutual benefits through international
20 trade. Any governmental measures and policies such as tariffs and quotas that distort the free flow of goods will create deadweight loss (a loss of efficiency) and a reduction in economic welfare. Such beliefs have been widely accepted around the globe and become the basis for the development of an international trading regime, most notably the WTO. Given that such views were widely accepted by policymakers, what considerations have led governments to take a position that is against the traditional economic theories and distort the free flow of cultural goods? The arguments have circled around the question whether or not cultural goods are different from other goods, and whether this is true of all kinds of cultural goods.
Not surprisingly, cultural goods are generally believed to be different from traditional manufactured goods, for the reason that they contain not only economic values, but also socio-cultural values. They are vehicles of symbols and meanings, which have an influence on our understanding of the world. The consumption of cultural goods, like reading New York Times, spending your evening time on the soap opera Friends, going to the cinema for the movie Beyond the Clouds (A Italian-French-German film directed by the Italian master director Michelangelo Antonioni), absorbing yourself in the imaginative Japanese comic One Piece, or dining at a Chinese restaurant, all influence us in an unconscious way and provide us with “recurring representations of the world”, they help to “constitute our inner, private lives: our fantasies, emotions and identities (Hesmondhalgh, 2002). It is this nature of cultural products that make governments cautious and sometimes ambivalent in their position towards the inflow of foreign cultural products. They are concerned about the possibility that foreign
21 cultural goods, often embedded with certain values and ideas, or even ideologies, might erode their national identity and cultural sovereignty and distinctiveness. This fear (of course there might be some certain economic considerations) prompts them to devise domestic cultural policy and measures to protect their domestic cultural industries and keep room for indigenous cultural expressions. In the meantime, revolutions of communication technologies and the relentless trend of economic globalization have created new opportunities for economic development.
Policymakers certainly do not want to lose the chance to take advantage of international economic integration, and they hope to benefit from such a global trend as classic economics have long proved that trade liberalization could increase welfare of the world, which is exemplified in the China’s case that will be addressed later in this paper. As a result, tariffs have been cut down to much lower levels, quotas and ownership restrictions, as well as other barriers to free trade have been reduced in many economic sectors across many countries. However, the cultural industries, the exception in the international trade agreements become an area that trade negotiators and government officials are circumspect and discreet in their steps to remove trade barriers.
Proponents of the cultural exception strategy also claim that trade liberalization in the cultural realm might also lead to cultural homogenization or even cultural imperialism (Herman & McChesney, 1997). If unlimited flow of cultural products across borders were allowed, local cultural industries might face more severe condition to survive amidst rigorous competitions, and international cultural
22 conglomerates will probably dominate domestic cultural markets, leaving no room for the expressions of local cultural voices, which is considered important in the formation of a unified cultural identity and cultural distinctiveness. If left unrestrained, the U.S. cultural products, carrying American culture, will dominate local cultural markets, as it is doing right now or even to a further extent that could threaten the cultural diversity and heterogeneity of the world. For countries that reject to liberalize their cultural industries, local cultural expressions are key in the formation of a collective cultural identity, as well as promoting social cohesion, especially in Canada and European Union where regional disparities, multiethnic, multi-linguistic populations exist to mitigate the governments’ efforts to achieve a cultural unity and collective consciousness.
2.3.2 Objections of Cultural Exception
Granted that cultural goods are different from other products by nature and able to contribute to broader sociopolitical and cultural goals, the cultural exception strategy still provokes much opposition, mainly from proponents of trade liberalization and economists. And their arguments are more from the perspective of economics.
One of the common arguments that opponents often adopt is that, just as elusive as the term could be, the underlying motivations for the cultural exception strategy could go beyond socio-cultural considerations, making the cultural exception a mask for economic protectionism. Greffe (Greffe, 2002) has put it: “Arguments in favor of cultural exception can, of course, mask other motivations, such as the interests of
23 lobbies wanting to protect their market positions and revenue from competition.”
Such a motivation is in fact another forms of trade protectionism. Government support measures to local cultural industries violate the accepted principles of trade liberalization and leave foreign cultural producers, most often the U.S cultural producers, at an unfair disadvantage. Such protectionism in the cultural industries goes against the trend of international economic integration, and results in loss of world welfare. However, some scholars remonstrate that government cultural policies against trade regime rules about market access and nondiscriminatory trade practices could not be simply characterized as protectionism.
In contrast, the key impulses trade scholars typically identify as motivating protectionism are not in play in the cultural sector. They are more “aligned with the embedded liberalism”(Goff, 2007), a school of criticism against the liberal ideology of free trade that Helleiner (2003) has identified, based on the work of Polanyi (2000).
In Polanyi’s account, rather than operating independent of the society, the economy should be embedded in society, or made subordinate to its collective purposes.
Because the market could create social dislocations within society, the state should intervene to prevent the situation of “stupendous industrial achievements of market economy bought at the price of great harm to the substance of society”. In this sense, protectionism is not an ideological or an interest-group-driven action, and the cultural exception is more of a strategy governments use to offset the cultural cost of trade liberalization.
24 In response to cultural exceptionist claims that the increasing globalization and trade liberalization in cultural industries could impair local ability for cultural expressions and bring about the inauspicious outcome of cultural homogenization and vitiate cultural diversity, the economist Tyler Cowen (2002), who represented the United
States on the UNESCO expert panel for the Convention on the Protection and
Promotion of the Diversity of Cultural Expressions, refuted such an notion and argued that the concept of cultural diversity has multiple and sometimes divergent meanings. It is necessary to differentiate between diversity within society and diversity across societies, and what really matters is which diversity can improve the wellbeing of individuals. In addition, cultural homogenization and heterogenization are not alternatives or substitutes, but rather come together. He also maintains that cultural trade and exchange, “while it will alter and disrupt each society it touches, will support innovation and creative human energies.” In such a position, Cowen gives more emphasis to the positive outcome that cultural trade could bring – the diversity within societies which is believed to increase the richness of menu and positive externalities in society.
2.3.3 Culture Exception Through a New Scheme?
It is apparent that the motivation for a cultural exception strategy is usually a combination of certain socio-cultural and economic concerns. Proponents of trade liberalization often decry domestic cultural measures in that they are just protectionism under the mask of culture. However, as illustrated by Goff, the key
25 impulses that trade scholars typically identify as motivating protectionism are not in play in the cultural sector (Goff, 2007). The main argument behind the cultural exception strategy is that cultural products play in the development of a country’s identity and the education of citizens, and market forces are likely to cause the disappearance of local original productions in favor of imports, thus diluting the country’s image (Greffe, 2002). Moreover, cultural policies that shield domestic cultural producers from marginalization by the influence of global cultural conglomerate are believed to contribute to promoting social cohesion, a sense of cultural belonging and collective particularity, which are quite obvious in the
Canadian and EU’s case.
However, are the measures that the Canadian and EU have employed in the name of
“cultural exception” really effective in achieving their socio-cultural objectives? Do policies such as audiovisual restrictions and quotas actually minimize the costs of meeting these objectives? Jagdish Bhagwati(2004), one of the most ardent free traders responded with negative answers. He argues that: “with modern technology, these restrictions can’t be anything but a nuisance with little effect”, and “the smart thing is to subsidize your own production.” In his work, Bhagwati argued that in the modern world, the ever-increasing ease of access to movies and television programs worldwide, and the ability to enjoy them on DVDs and the internet at home, where no effective constraints can apply, have made protective measures in cultural industries ineffective. Adopting the policy of permitting free imports of cultural products while subsidizing the production of local cultural goods, and leaving audiences to consume
26 what they wish, would surely be a better option for governments to achieve their socio-cultural objectives. At face value, the approach Bhagwati proposed sounds to be a valid solution to the conflicts surrounding cultural exception strategy. However, this approach of encouraging free trade in cultural products while allowing domestic subsidy is another form of cultural exceptionism or even economic protectionism essentially. The discriminative treatment of cultural products in interntional trade could not escape the attacks of opponents of cultural exceptionism as it provides an unfair competition advantage to domestic cultural producer over foreign competitors.
It is fundamentally another way of “excepting” cultural products under a new mask.
Table 1 provides a short summary of all the arguments of both sides.
Proponents of Cultural Exception Opponents of Cultural Exception
# The Socio-cultural Values of Cultural # Cultural exception as a mask for goods and products economic protectionism
# Cultural identity and sovereignty # Cultural diversity within society as opposed to across societies # Cultural diversity and local cultural expression # Physical restrictions on the flow of cultural products no longer effective in # Side effects of trade liberalization: the face of new technologies cultural homogenization and cultural imperialism
Table 1. Major Arguments of Cultural exceptionists and trade liberalists
27 2.4 Policy Formation Process and Kingdon’s Policy Window Model
After a background introduction of China’s cultural industries and some international cultural policies that are related to cultural trade, this section concentrates on previous literature on the process of policy formation and then lay down an analytical framework to disclose and explain the paradoxical position that the Chinese government has taken regarding the development of cultural industries in a more integrating world economy. Through analyzing the commitments that China has made during its WTO negotiation, and comparing with some international measures that have been discussed in earlier sections, a clearer picture of China’s cultural trade policy will be presented, and an interpretation of China’s cultural industrial policies will be provided in Chapter. However, till then the study only address the question of
“what” about China’s cultural industrial policies. In order to answer the question of
“why” and “how” has China taken its current position regarding cultural industries, the formulation process of China’s cultural industrial policies must be examined closely. Thus, this section will lay down an analytical background for the study of
China’s cultural policy formation drawing upon major approaches to public policy formation. The first part will introduce three major approaches of interpreting public policy formation and examine rationales behind these approaches. After that, the researcher will focus on Kingdon’s policy window model, preparing an analytical basis for building a framework to explain China’s cultural polices and industries in later chapters. At last, a working theoretic framework will be built to explain China’s cultural industrial policies and the process of cultural industrialization.
28 2.4.1 Policy Formation Process Theories – Some Major Approaches
The process of public policy formation is usually a complicated one, which requires a variety of factors interacting with each other to make an idea into a policy. Despite the difficulty to provide a clear-cut framework for policy formation, political scientists have offered some alternatives to explain the intricate process of public policy formation. According to Kingdon (1984), public policy making could be perceived as a set of processes, including at least 1) agenda-setting, 2) specification of alternatives from which a choice is to be made, 3) an authoritative choice among those specified alternatives, 4) implementation of the decision. In a similar mode,
Simon (1966) describes the decision making process as directing attention, discovering or designing possible courses of action, and selecting a particular course of action. Although the phrases and categories used in these discussions might differ, they roughly correspond to agendas, alternatives, and implementation. This study focuses on the first two processes in order to address the questions of why some subjects become prominent and get onto the policy agendas and why some alternatives are more seriously considered and others are neglected.
Along the years, political scientists have conducted many studies to discover and elucidate the complex and chaotic process of policy-making, and there are mainly three approaches: tracing the origins of initiatives; rational decision-making and incrementalism. Each of these approaches could at best explain partly the public
29 policy making, and have their own limitations. However, they provide insight and different perspectives into the complexity decision-making process.
Tracing the Origin
Tracing origins is an approach with a presumption that during the process of public policy making, there should be an identifiable starting point or an origin for an initiative to spring up. This approach could not make for very complete theory about agenda-setting or alternative specification. Kingdon (1984) identified three reasons for its inadequacy: 1) ideas can come from anywhere; 2) tracing origins could result in an infinite regress; 3) nobody leads anybody else. Ideas that are developed into policies could come from a plethora of different sources, and it would be extremely difficult to pinpoint a single source as responsible for the idea. Moreover, the critical attribute for an idea’s prominence on an agenda is not its source, but the climate in government or the receptivity to ideas of a given type, regardless of source (Kingdon,
1984). In other words, the key to understand policy formation is not where the idea comes from but what make it take hold and grow. Another reason for tracing origins to turn futile is that an idea usually has a history, and there is not physical and logical point to stop the tracing. The last problem involves the pattern of an idea’s movement among the policy communities. An idea usually does not follow a regular pattern
(high to low, or low to high) among political participants, and there are no consistent
“leaders” when across many subjects.
30 The Rational Model
The comprehensive and rational decision-making model has been a popular one in public policy studies, and there are ample critiques developed in earlier literature.
According to this model, policy makers would first try to give a clear definition of the goals, and set the levels of achievement of those goals that would satisfy them. They will conduct a cost-benefit analysis, comparing each alternative that might lead to the attainment of goals. Based on a systematic assessment of all the alternatives, they would choose the one that would achieve their goals at the least costs. This rational decision-making model corresponds to the rational assumption in economics that policy makers all behave in a rational way, and will try to maximize the “profits” of a public policy.
However, just like what happens in the realm of economics, the rational decision- making model does not depict the reality of policy-making accurately as well.
Scholars have identified various reasons for its inadequacy. March and Simon (1958) point out that the limited ability of human beings to process information could not fit with the comprehensive approach as described in the model. One question is that policy makers could not canvass many alternatives, keep them simultaneously in their heads, and compare them systematically. Moreover, the alternatives generated might not only comes along with an economic cost-benefit analysis but sometimes also a necessary political calculus as well – which in turn making the alternatives not rational in a pure economic sense. Also, problems could not always be identified and
31 the clarity of goals and objectives is hard to achieved as well. Lindblom (1959) specify the goal clarity problem as he states that the clarification of goals could even become counterproductive when building a political coalition involves persuading people to agree on a specific proposal when they might not agree on a set of goals to be achieved.
Incrementalism
In order to address the concerns of the rational decision-making model, some scholars developed a model dubbed as an incremental approach to policy making. In contrast to the rational model, incrementalism proposes that decision makers should take what they are currently doing as given, and make small, incremental marginal adjustment over time in order to create a larger based policy change (Lindblom 1959; Wildavsky
1979; Etzioni 1967). The advantages of incrementalism is that under this model, policy makers need not to deal with formidable numbers of far-reaching changes, and spend excessive time defining goals and comparing different alternatives, but only focus on manageable adjustments to current behaviors (Kingdon, 1984). The result is that police changes are gradual, continuous, and step-by-step. This incremental model does describe many political and governmental processes and is important in understanding the development of alternatives and proposals, as policy makers tend to readjust to ideas and approaches with which they are already familiar with while generating alternatives. However, as Kingdon points out, the incremental model
32 might not well explain the process of agenda change, since agenda change appears quite discontinuous and non-incremental.
Although these approaches could be used to analyze certain aspects of China’s cultural policy-making, neither one of them holds the potential to adequately explain the complicated cultural policy-making process of China. The origin approach presumes an identifiable starting point for policies, while such a point is hardly traceable in the case of China. The rational model could not sufficiently explain the political factors that are paramount in China’s cultural policy-making. The incrementalism suggests a planed and gradual progress on cultural policy-making.
However, the drastic changes happen in the political and economic realm of the
Chinese society make this approach not applicable as well. There needs to be a model that could catch the paradigmatic shift in China’s cultural industrialization (from cause to industry), and incorporate the long-term contextual changes as influencing factors. Kingdon’s Policy Window Model provides such possibility.
2.4.2 Kingdon’s Policy Window Model
In his classic political science and public policy Agenda, Alternatives and Public
Policies, Kingdon introduces a new approach – the policy window model as a means to explain the agenda setting and alternatives specification process of the U.S federal government. In this book, Kingdon argues that a public policy is often resulted from the convergences of three streams: problems, politics, and policies, which are three
“streams” that flow independently of one another and constitute the policymaking
33 process. A window is “an opportunity for advocates of proposals to push their pet solutions, or to push attention to their special problems” (Kingdon, 1984). The windows might open for a variety of reasons. It could be the shift of national mood or new popular perceptions; it could be political events such as the change of administration, legislature, etc; it could also be due to a pressing problem that creates opportunity for advocates of proposals to attach their solutions to it. When the windows open and result in a restructuring of governmental agenda, it could be only due to either the occurrence of the problem stream or the political stream. However, when the decision agenda is restructured, it requires the coupling of all the three streams, and policy entrepreneurs are the key role players in the coupling process, as they “attaching solutions to problems, overcoming the constraints by redrafting proposals, and taking advantage of politically propitious events (Kingdon, 1984).
The Problems Stream
The problems stream involves identifying what brings certain problem to the public and policymakers’ attention, defining the problem, finding a solution to the problem or just let the problem fade away from sight. There are endless problems in a country, and policymakers could only focus on certain problems and neglect others. The problems that come to the attention of governmental decision makers are usually through some systematic indicators, as governmental and non-governmental agencies routinely monitor various activities: highway death, consumer prices, disease rates, etc. Decision makers use these indicators to evaluate the magnitude of a problem and
34 become aware of changes in the problem. Although indicators are very powerful, there could also be concerns in the interpretation of the indicators. Kingdon points out:
“the methodology by which the facts are gathered and the interpretations that are placed on these facts become prominent items for heated debate”. In addition to indicators, problems identified usually get the attention through a focusing event like a crisis or disaster, a powerful symbol that catches on, or the personal experience of a policy maker. Governmental officials could also become attentive through feedbacks about the operation of existing programs.
Problems might also fade away for a couple of reasons: 1) the belief that a problem is solved; 2) growth and expansion levels off; 3) failure to address a difficult problem.
For a difficult problem to fade away from public attention, it is due to the fact that a short period of awareness and optimism on solving a problem might surrender to a realization of costs required for action (Downs, 1972).
Another aspect of the problem stream is the problem definition process. Because there are great political stakes in problem definition, how a problem is defined could lead to important consequence. To define a problem, the first thing usually requires distinguishing between a condition and a problem. According to Kingdon, a condition would become a problem only when “people must become convinced that something should be done to change it”. Based on this, conditions could be defined as problems through three ways: 1) values, such as liberal or conservative; 2) comparisons, such as U.S versus Iraq; 3) categories, for example, the public transit for the disabled could
35 be defined either as a transportation problem or a civil rights problem. The categorizations of problems will largely influences the resolving of the problem.
The Political Stream
The political stream is where the governmental agenda – the list of issues or problems to be resolved – is formed. It is composed of things such as national mood, interests group pressure campaigns, elections results, changes of administration, changes of ideological or partisan distributions in Congress. The first major component of the political stream is the national mood, which is often perceived in the attitudes of various active sector of the public, and politicians might identify the mood from various communication channels. The second component involves organized political forces, including interest group pressure, political mobilization, and the behavior of political elites. An issue could get on the governmental agenda because the leader is in favor of it, or the side supporting the issue is more adamant about their position.
When there is a balance on both sides of an issue, a deadlock could be created and no change be made. The last component of the political stream is the events within government itself like administrations change or changes in Congress. New administration and Congress change could create opportunities to push some proposals and bring with marked changes in policy agendas.
Consensus in a political stream is usually achieved by bargaining. Through bargaining and compromising, political participants build coalitions in return for support, and avoid the loss of an entire project when compromise could not be made.
36 The willingness to build coalition and achieve consensus is sometimes a consequence of an intensifying desire by the participant to be “dealt in” on the policy resolution and not to be excluded (Henry, 2007).
The Policy Stream
The policy stream is where the decision agenda or “alternative specification” is formed. The decision agenda is the list of alternatives from which a public policy may be selected by policymakers to resolve a problem. The policy communities are central place for alternatives to be formulated, and are composed of specialists and intellectuals in a given policy area inside and outside of the government. These policy specialists generate alternatives and proposals to push into the decision agenda, and many of these ideas are considered at some stage and in some way. For an alternative to get serious attention and become effective, policy entrepreneurs who hold a deep and abiding commitment to a particular policy change proposal are of the most import.
These policy entrepreneurs are political participants who would like to invest their resources with the hope of a future return. They advocate proposals to promote their personal interests and values, solve a problem, and shape public policies.
Usually, the enthusiasm of policy entrepreneurs alone can not propel a proposal to on the top of the agenda. There are certain criteria for the survival of an idea and proposal according to Kingdon: 1) technical feasibility, which is the technical practicability of implementing an idea; 2) value acceptability – an idea must be compatible with the specialist’s values 3) anticipation of future constraints – taking
37 into consideration of constraints that might rise up in future stage, such as budget constraint, public acquiescence, etc. Through this selection process based on the criteria, the policy stream then produces a short list of proposals, which is an agreement that a few proposals are prominent. It is important to notice that the viability of a proposal or alternative is key in the placement of a subject in governmental agenda, and could highly increases the chance for the subject to be placed on the decision agenda.
The Joining of Streams and The Opening of Policy Window
The policy window opens when the separate streams of problems, politics and policies join together at certain critical time. When the policy window opens, policy entrepreneurs have an opportunity to push their pet proposals or their conceptions of problems. Usually, the opening of policy window is triggered by appearance of compelling problems or events happened in the political stream, which Kingdon also calls “problems windows” and “political windows”. When the trigger is pulled, policy entrepreneurs are responsible for the opening of policy window through “coupling”, which involves attaching their prepared proposals and solutions to problems that float by, or utilizing the favorable climate for their proposal caused by a change of administration, etc. Therefore, Kingdon’s model stressed the importance of a worked- out, viable, and available proposal at hand even before problems and political changes happen. Policy entrepreneurs must have their proposals ready, and wait for problem or political windows to happen. When the problem and political windows open, they
38 use the propitious time period to push a subject into the decision agenda through coupling of all three elements – problem, proposal, and political receptivity, resulting in the opening of a policy window.
2.5 The Multiplexity of China’s Cultural Industries and Kingdon’s Model
The unique developmental route of China’s cultural industries reveals an important characteristic that is essential for the understanding of China’s foreign and domestic cultural policies and the cultural industrialization – multiplexity. Multiplexity not only refers to the complex and multi-faceted nature of China’s cultural industries, but also refers to multiple behind-the-scenes factors that have contributed to the formation and China’s cultural policies and industries. This multiplexity is not only reflected in the process of how the cultural industries are set up and formed, but also in the cultural policies that are guiding the development of the sector. It should be noticed that in order to understand China’s domestic and foreign cultural policies, one should be aware of the multiple factors and forces that were shaping and influencing the policy generation process, including general economic reform, the opening up policies, the pressure to keep up with international standards and competition, and the ideological considerations for preserving an authentic Chinese cultural in globalization, etc. These multiple factors and forces are all derived from the unique transitional nature of Chinese society. When the economic reform and opening-up policies were initiated in 1978 after the Cultural Revolution, the steering wheel of the
Chinese society was turned 180 degrees and the whole economic system was
39 reconfigured to match with the market economic mechanism. This reconfiguration led to great transformation in many areas of the cultural system from ideational change to production capacity building to global harmonization. These multiple aspects of the cultural industries should be well studied and incorporated in the understanding of
China’s cultural policy formation and cultural industrialization. Moreover, these multiple aspects of China’s cultural industries should not be simply put together as an assembly of facts, but should be organized and integrated into a systematic framework as an approach to understanding China’s cultural policies and cultural industrialization. Kingdon’s policy window model provides such a theoretic basis for this approach.
As illustrated in the previous section, Kingdon’s policy window model provides an explanation for the complicated process of policy formation. Through tracking the different streams that collectively lead to a policy, the policy window model offers a theoretic framework that could integrate the multiple aspects of policy formation.
Kingdon’ model in fact puts up a foundation that could be built into a tailored framework to explain the complicated process of China’s cultural policy formation, and to understand the motivations of the Chinese government behind these policies.
With the examination of the components of Kingdon’s policy window model and the particularity of China’s cultural industries, a working model can be established to explain and interpret China’s cultural policy formation process, and to a greater extent, the cultural industrialization process. It utilizes Kingdon’s model as an analytical foundation and specifies individual factors that are paramount in the three
40 streams of China’s cultural policy formation. There are four key components in this analytical framework: global harmonization; ideational change; structural readjustment, and production capacity building.
1) Global harmonization: global harmonization belongs to the problem stream of
China’s cultural policy formation. The last two decades of the twentieth
century were just the start of a long and complicated revitalization of the
cultural system/industries. During this period, the negotiation on China’s
WTO accession was ongoing and the discussion of cultural industries on the
negotiation agenda required China to quickly set up standards for its cultural
industries for the purpose of coming in line with international rules. This
pressing demand formed the problem stream, and accelerated the process of
China’s cultural industrialization.
2) Ideational change: ideational change belongs to the political stream of China’s
cultural policy formation and industrialization. To change the deep-rooted
perceptions of culture as a socialistic cause and to accommodate the industrial
aspect of culture in the market economic system, the political stream must
create opportunities for ideational change and political approval for the
development of cultural industries.
3) Structural readjustment and production capacity building: the two policy
alternatives constitute the policy stream. With the joining of problem and
political streams, China’s cultural industrialization policy window finally
opens. Through a market economic approach, cultural policies that aim to
41 restructure the cultural system and establish production capacity of cultural
industries are generated to answer international demand and keep in line with
political change.
42
CHAPTER 3:
METHODOLOGY, ANALYTICAL FRAMEWORK AND DESIGN OF THE
STUDY
This Chapter presents the methodology with which previous literature and necessary data for the study is collected and analyzed. The chapter aims to establish an analytical framework for grouping all previous discussed literature and collected data for in-depth analysis. Finally, the researcher will point out possible limitations and constraints during the research process.
Methodology
The nature of this study is a qualitative one, which Creswell (1994) defines as:
“an inquiry process of understanding a social or human problem, based on building a complex, holistic picture, formed with words, reporting detailed views of informants, and conducted in a natural setting.” Qualitative research is by nature an interpretative and naturalistic approach as in which researchers “study things in their natural settings, attempting to make sense of or interpret phenomena in terms of the meanings people bring to them”(Denzin & Lincoln, 1994). Through putting China’s cultural policies in the unique setting of China’s economic transformation, this study utilizes a
43 qualitative approach to provide a genuine depiction of China’s cultural industrialization though the theoretical framework presented in Chapter Two.
Using this theoretic framework, this research seeks to answer two major questions of
China’s cultural industries: 1) what is Chinese government’s approach to the development of cultural industries – taking into consideration the context of globalization and international economic integration, as well as demands on the domestic cultural market to gradually open to foreign competitors. To answer this question, the researcher will closely examine the part of China’s WTO commitments that are related to cultural industries, which could serve as the primary indicator of
China’s foreign cultural industrial policies. Then the researcher will compare the measures taken by the Chinese government with some international measures that have been illustrated in Chapter Two, as a means to disclose the true position of
Chinese government on the issue of globalization in cultural industries. 2) The second question is concerned about why and how the Chinese government has taken its current cultural polices? Having dealt with the question of “what”, the research will turn his focus to the “why” and “how” of China’s cultural policies through building an explanatory theoretical framework basing on Kingdon’s policy window model.
Through identifying the three independent problem, political and policy streams of
China’s cultural industrialization policies, the theoretic framework will not only answer the question of China’s cultural policy formation, but also present a holistic picture of China’s cultural industrialization process.
44 Data Collection
The data in this study will be drawn from a variety of resources including governmental and institutional documents, reports, academic writings, commentaries, press releases, published statistics data, legal documents, etc. Through extensive document and literature reviewing, the researcher sorts the collected information and data into different categories for the theoretic framework of China’s cultural industrialization. These collected data, through proper interpretation of the framework, could present a rather realistic and concrete image of China’s cultural industries and policies. Meanwhile, it should also be noticed that the official recognition of cultural industries in China has a short history and there is no comprehensive unified statistics that could fully cover all segments of China’s cultural industries. These data are “partial” by nature, and suggest novel explanation based on more thorough and comprehensive statistics that might become available in the future.
Possible Limitations and Restraints
In addition to the issue of incomplete data, this research also faces some other possible limitations and restraints that need to be noticed. One of the biggest concerns is the contextual issue. Cultural industries were born in a pure market economic system in western countries; however, the cultural industries in China are at best a product of planned economy and market economy, a hybrid of cultural institution and cultural industry. The environment from which China’s cultural industries emerge
45 stands in great contrast from its western counterparts. The differentiation in background setting creates a series of concerns that need to be paid attention to: 1) the use of terminology. Although the Chinese government is currently using the term of
“cultural industry” and some municipal governments use the term “creative industries”, it is quite possible that the connotations and implications of these terms are not identical from a western perspective due to the hybrid nature of China’s cultural industries. 2) differentiation in interpretation. As qualitative research is interpretative by nature, the differences in setting might possibly lead to differences in interpretation. The unique setting of China’s cultural industries requires that the interpretation on the collected data and information be tailored to the fit with the specific circumstances of China. 3) modification of policy model. Kingdon’s original policy window model was built to analyze the federal policy formation process of the
U.S. government. Since China’s political system differs greatly from the western political system, this requires a careful modification of Kingdon’s policy window model to interpret the cultural policy formation process in a Chinese political system.
Overview
In next chapter, the researcher will closely examine China’s foreign industrial cultural policies for the purpose of discovering the Chinese government’s true stance on cultural industries in a world that is more economically, socially, and culturally interrelated. China’s commitments in WTO concerning cultural industries, as well as domestic component of cultural industrial policies, will be examined. A tentative
46 interpretation will be rendered to present a holistic picture of China’s cultural industrial policies
47
CHAPTER 4
THE PARADOX OF CHINA’S CULTURAL INDUSTRIAL POLICIES:
CULTURAL EXCEPTION AND CULTURAL AMBITITION
Although cultural industrialization policies could be studied through multiple perspectives, this study tries to identify China’s cultural industrial policies through two major components: foreign and domestic policies. Through separating foreign industrial policies from domestic ones, it is easier to reveal the different behind-the- scenes forces that have been influencing the cultural policy-making process of the
Chinese government in the context of international economic integration. The foreign cultural industrial policies of China will be studied through a major indicator of foreign trade policies – WTO commitments regarding cultural industries, and domestic cultural industrial policies will also be studied through a review of governmental plans regarding cultural industries. The examination of these two major components of China’s cultural industrial policies will reveal a paradox in the development of China’s cultural industries, as the nation is striving to keep in balance between two seemingly contradictory approaches towards cultural industries. The cultural exception strategy and an ambitious cultural developmental plan are practiced at the same time, which implies the uncertainty of China’s cultural policy-makers on
48 the development of cultural industries. This chapter will focus on the paradoxical position that the Chinese government has taken towards its cultural industries and give a tentative interpretation of the paradox.
4.1 Cultural Exception Versus Cultural Ambition
To discover the Chinese government’s approaches on developing cultural industries in a world that is more economically integrated, and to reveal China’s foreign cultural industrial policies, this section will first focus on the primary indicator of cultural policies related to trade – the parts of WTO agreements that cover segments of the cultural industries, and then turn to domestic cultural policies regarding the development of cultural industries.
The rules of WTO that affect cultural industries and the formation of national cultural policies can be found in two main WTO agreements: the GATS and
TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights).
The GATS aims at liberalizing and increasing international trade in cultural services – mainly audiovisual products and services, while the TRIPS is also an international agreement administered by WTO that sets down minimum standards for many forms of intellectual property regulation and provides necessary protection of content and authors. Both agreements are important to the development of the sector, affecting cultural industries both domestically and internationally.
49 Between these two agreements, the GATS is perceived as the foremost international coordinating mechanism governing commercial flows of cultural products and services. In order to keep the discussion in a manageable range, this study concentrates only on the GATS agreement and its components that are related to the cultural industries. The GATS emerged out of the Uruguay Round of multilateral trade4 talks that gave birth to the World Trade Organization. While quota-free entry
(“market access”) and national treatment are generally applicable obligations under
GATT, they apply under the GATS on a sector-by-sector basis and only to extent that no qualifications (“limitations”) have been scheduled. Thus, the rudiments of GATS mechanism rested on two elements: countries would liberalize or open their markets in selected sectors (known as positive lists) and then put in restrictions within these sectors (known as negative lists)(Singh, 2007). This rule allowed countries to liberalize certain sectors while restricting others at the same time, as well as open up a specific sector and use the negative lists to keep subsectors (e.g. distribution services) out of its liberalization profile. This mechanism was exactly the legal basis for the cultural exception strategy and the now-famous Most Favored Nation (MFN)5 exemption clause that allow countries to preserve their cultural industry policies.
4 The Uruguay Round was the 8th round of multilateral trade negotiations launched at Punta del Este, Uruguay in September 1986 and concluded in Geneva in December 1993. The round conducted within the framework of the General Agreement on Tariffs and Trade (GATT), embracing 110 countries as “contracting parties” and transforming the GATT into the World Trade Organization. 5 Most-favored-nation is a basic principle of the WTO trading system ensuring that under the WTO agreement, countries cannot discriminate between their trading partners. It means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners.
50 Commitments of China Related to Cultural Industries
During the negotiation days of China’s accession into WTO, unlike the EU government, the Chinese government did not declare a “cultural exception” for protection of its cultural industries. However, the commitments that China has actually made related to cultural industries remained cautious and discreet (Xia
Y. , 2004). In China’s schedule of specific commitments, China did not include one of the core sectors that appear in the generally accepted classification system usually adopted by WTO members: the Recreational, cultural and sporting services sector. However, China did incorporate some major sub-sectors of cultural industries into the agreement, for example, the audiovisual services. In its schedule, China scheduled only partial commitments regarding videos, sound recording distribution services, and cinema theatre services. In fact, China imposed not only quantitative restriction, but also qualitative restriction on these scheduled cultural products and services. For instance, the number of imported films is limited to 20 titles per year, and the importation of foreign films is also subject to content examinations and must comply with China’s regulations on the administration of films. Overall, China’s commitments concerning cultural industries in the GATS agreement were extremely limited. See table 1 that shows
China’s specific commitments in audiovisual services.
In addition to the audiovisual services, China also opened some of its other cultural industries sub-sectors such as the distribution and retailing services of
51 books, newspapers, magazines with the exemption from the MFN clause for a couple of years. Just as stated in the commitments “For these products, foreign service suppliers will be permitted to engage in the distribution of books, newspapers, magazines, pharmaceutical products, pesticides and mulching films within three years after China's accession…Foreign service suppliers will be permitted to engage in the retailing of all products, except for the retailing of books, newspapers and magazines within one year after accession…” (See
China’s WTO commitments)
52 Sector or Limitation on market Limitation on Additional Subsector access national treatment commitments
02.D Audiovisual 1) None 1) None Without prejudice Services 2) None 2) None to compliance with China's regulations - Videos, 3) Upon accession, 3) None on the including foreign services 4) Unbound, except as administration of entertainment suppliers will be indicated in Horizontal films, upon software and (CPC permitted to establish Commitments accession, China 83202), contractual joint will allow the distribution ventures with Chinese importation of services partners to engage in motion pictures for the distribution of theatrical release - Sound recording audiovisual products, on a revenue- distribution excluding motion sharing basis and services pictures, without the number of prejudice to China's such imports shall right to examine the be 20 on an annual content of audio and basis. video products 4) Unbound, except as indicated in Horizontal Commitments - Cinema Theatre 1) None 1) None Services 2) None 2) None 3) Upon accession, 3) None foreign services 4) Unbound, except as suppliers will be indicated in Horizontal permitted to construct Commitments and/or renovate cinema theatres, with foreign investment no more than 49 per cent. 4) Unbound, except as indicated in Horizontal Commitments
Table 2. China’s WTO commitments in audiovisual services
53 Notes: 1) Cross-border supply, 2) Consumption abroad, 3) Commercial presence, 4) Movement of natural persons.
Source: China’s Schedule of Specific Commitments on Services List of Article II MFN
Exemptions (GATS/SC/XX),
An Implicit Cultural Exception Strategy
From above, we see that although a clear “cultural exception” was not an official strategy of the Chinese government, the specific commitments that China has made upon cultural industries resembled some of the familiar measures that have been taken by Canada and EU and other countries that had officially adopted the cultural exception strategy. Those limitations on market access and national treatment of cultural products and services ensured that the Chinese government could still have control over the cultural industries and gradually open its cultural market to a controllable degree.
Such a goal is achieved through explicit and implicit measures. Explicit measures are clearly written into China’s schedule of specific commitments, and can be clearly seen in the film sector, such as ownership restrictions in cinema theatre services and import quotas that keep the maximum amount of imported films to twenty every year. Implicit measures refer to certain commitments that were written in the agreement, but due to their opaque nature, the Chinese government retained the flexibility to limit inflow of cultural products without breaking the WTO rules. Such implicit terms could be found in sentences in the
54 audiovisual sub-sector commitments like “Without prejudice to compliance with
China’s regulations on administrations of films”, “without prejudice to China’s right to examine the content of audio and video products”. The wording of these commitments in fact granted China the right to regulate the audiovisual sector in its own fashion, as long as these regulations do not bluntly violate the basic principles and rules of the WTO. The content examination clause of imported films, although generally believed to be a necessary measure, could allow
Chinese film administrators to set up the standards of what qualification a film must meet to be imported into China. In fact, such content concerns of cultural products are not only driven by pure economic consideration, but also driven by remnants of the pre-1978 domestic cultural policies that related culture and cultural products closely to politics and ideology. Also, the requirement that imported films must adhere to China’s regulations on the administration of films also conceives some domestic cultural policy measures affecting foreign motion pictures, such as local content requirement. See below some of the articles in the
Regulations on the Administration of Films that was promulgated by the State
Council of China in 2001:
Article 30 Import of films shall be managed by units approved by the
administrative department of radio, film and television of the State Council
for engaging in film import; without approval, no other units or individuals
may engage in film import.
55 Article 44 The ratio of time spent on the projection of domestic films and that
spent on the projection of imported films shall be consistent with stipulations.
The time spent every year by a film projection unit on the projection of
domestic films may not be less than two thirds of the total time spent
annually by the same projection unit on film projection.
In article 30, we see that film importation is controlled by units that can obtain approval from the administrative department of radio, film and television of the State
Council, which is the State Administration of Radio, Film and Television (SARFT).
In fact, there are only two units that have obtained approvals from the SARFT to conduct importation and exportation of films – the China Film Import and Export
Corporation (CFIEC) and Huaxia Film Distribution. CFIEC is a subsidiary of the
China Film Group Corporation (CFGC). The CFGC was conglomerated in 1999 as the most comprehensive and extensive state-owned film enterprise in China with the most complete industry chain that facilitates film production, distribution and exhibition as a coordinated process and integrates film, TV and video into one single entity. The Huaxia Film is also a state-owned film company that was established in
2003 through an administrative order of SARFT to incorporate 19 small state-owned film companies as investors. The company aims to bring a sense of competition in the imported film distribution market that used to be monopolized by CFIEC. However, the effect of these efforts remains doubtful because both companies are state-owned enterprises, and are subject to the SARFT. Their decisions upon film importation
56 might very possibly reflect the preference of SARFT, thus making high possibility of state manipulation on import of films.
It should be noticed here that during the building process of a cultural industry, the
Chinese government has taken a vertical integration approach in order to achieve international competiveness in the post-WTO era. While in the US, such vertical integration measures are virtually prohibited as a result of anti-trust policy that aims to protect free competition and free expression. Such a difference in approach could be a reflection of the different stages of the two countries’ cultural industries. The fledging status of China’s cultural industries requires the Chinese government to focus on strengthening the competivity of its cultural industries, while the U.S government tends to be more concerned about preserving different domestic cultural voices. However, this difference in focus is not applicable from a global perspective.
For example, the U.S is not concerned about other country’s local cultural expression when exporting their cultural products and Hollywood movies almost dominate every foreign film market they are brought to, shoving local films into a difficult survival situation. Such differentiation implies when making cultural policies, governments used to have double standards regarding domestic cultural producers and foreign competitors. Economic interests and cultural expressions are the two “initial starting points” for international trade and competition in cultural industries.
In addition to the measures mentioned above, China also utilizes one of the most common measures that pro cultural exception countries have been taken, the local
57 content requirement. The Article 44 ensures that local movies will have a sufficient amount time of projection in theatres, and foreign films are restricted to have no more than one-third of total theatre projection time. This clause reflects the SARFT’s concerns of foreign, especially Hollywood dominance of the domestic film market that eats up the time for domestic films in movie theatres.
Now it becomes clear that although the term “cultural exception” was not used by
China’s trade negotiators during the accession talks, the specific commitments schedule made by China in its cultural industries in effect constituted an implicit cultural exception strategy that allows China to open its cultural industries to a limited extent within which the Chinese government feels confident to take control of through a series of domestic cultural industrial polices, in order to ensure the healthy development of a socialist culture on its own agenda.
Cultural Ambition – Riding the Wave of Cultural Economy
The position that China’s has taken on cultural industries in the WTO negotiations shows that the Chinese government and China’s leaders are cognizant of the threat and cost that trade liberalization might bring to a Chinese culture. For instance, former president Jiang Zemin recognized that while China is “opening wide to the outside”, there are:
“a few countries that have tried to force their own values, economic
regime and social system on other countries by taking advantage of
58 economic globalization…we must take it as a crucial task in our
cultural development to carry forward and cultivate the national spirit
and incorporate it into our national education and the entire process of
building spiritual civilization…”6
In a similar vein, this notion of cultivating a “national spirit” and “spiritual civilization” has been reiterated by other China’s leaders. It implies that under the context of economic globalization, the Chinese government must play a decisive role in the protection of national identity and cultural heritage, and develop an “advanced culture with distinct Chinese characteristics and to build a socialist spiritual civilization”. This view reveals a fundamental belief in the state’s responsibility and capacity to protect a “socialist culture” through market intervention (Knight, 2006), and serves as the theoretic and political basis and reason for China’s implicit strategy of cultural exception in the WTO agreement.
However, the determination to protect the “socialist culture” from the “erosion” of foreign cultural products meets challenges from the dynamic and constantly changing environment. The drastic transitional nature of the Chinese society and the ongoing development of international cultural industries are shaking the faith of cultural protection. There are three main factors contributing to this shift. First is the fact that although the Chinese government has devised policy measures to protect its domestic
6 Jiang Zemin, “Zai qingzhu Zhongguo gongchandang chengli bashi zhounian dahui shang de jianghua” (Speech at Grand Gathering Marking the Eightieth Anniversary of the Chinese Communist Party), People’s Daily, 2 July 2001, pp. 3–4.
59 cultural industries, it is becoming clearer that – state intervention or no” – China’s culture just cannot remain immune from the cultural effects of globalization, especially in an age when technologies and communication revolutions are changing the picture of everyday life. Second, It is also an established belief that participation in the process of international economic integration and the liberalization of trade could speed up the modernization of China and its economic development. Market restriction might result in economic efficiency lost, and could also lead to the loss of opportunities that could help the country stay ahead of economic development. Third, the development of cultural industries has resulted in many new features of the industries. Among them, one important feature is that, as illustrated by
Hesmondhalgh (2002), the cultural industries have moved closer to the center of the economic action in many countries and across much of the world. Cultural industry companies are no longer secondary to the ‘real’ economy, but rather becoming the engine and driver of economic growth, as shown in the UK’s case7. Also, some of these companies, like Disney, News Corporation, Sony, are amongst the most highly valued and discussed businesses in the world.
Along with the development of cultural industries, the Chinese government’s attitudes towards culture and cultural industries are developing as well. As the cultural market is recognized as a potential global market, the CPC have come to believe that during the process of international economic integration, obsolete
7 UK and some of other European Countries prefer to use the term “creative industries”. In discussion, “creative industries” and “cultural industries” are often used interchangeably as most of their sectors overlap.
60 attitudes toward culture could result in lost of opportunities. The only approach for
China’s cultural industries to get ahead is to change cultural practitioners’ attitudes, learn successful experience from other countries, foster the development of cultural companies that have the potential to prevail in international competitions, and participate in the global market (Zou & Xu, 2006), which could only be achieved by gradually opening the cultural industries. In 2004, China’s president Hu Jintao gave a speech at the opening ceremony of Boao Forum for Asia (BFA), in which he mentioned the intention of China to build an “Asia-wide culture market”:
“…promoting cultural interaction and personnel exchanges. China is
committed to stronger cultural exchanges in Asia, and encourages media
cooperation to jointly build an Asia-wide cultural market. China supports
inter-culture and inter-religion dialogues in Asia, and advocates greater
understanding and tolerance.”(Hu J. , 2004)
Moreover, China’s leaders have constantly indicated their intention to take advantage of the rapid economy development and support key Chinese enterprises to “go global”, of course including cultural corporations, This is reflected in Premier Wen
Jiabao’s Report on the Work of Government 2008:
“We will expand the breadth and depth of China's openness and make its
economy more open. We will accelerate change in the pattern of foreign
trade growth, improve the mix of exports, encourage the export of products
with Chinese intellectual property rights and trademarks, and raise the
61 quality, grade and added value of exports while maintaining steady export
growth… We will improve the mix of industries using foreign investment
and their geographic distribution, and steadily make service industries more
open… We will make innovations in the way we make investments and
engage in cooperation overseas, and improve and implement policies and
measures to support Chinese enterprises wishing to "go global." We will
strengthen bilateral, multilateral and regional economic cooperation. We
will continue to promote talks on free trade zones and honor the treaties we
have signed. We are committed to an equitable international trade order”
(Wen, 2008).
Further liberalizing the service market, increasing export of cultural products and encouraging Chinese cultural enterprises to “go global” have exhibited the Chinese government’s ambition to boost the development of cultural industries and the overall economy through integrating itself into the global economic system. Such an ambition is parallel to the Chinese government’s plan to further utilize the cultural industries as a potential economic development engine, and it also implies that the market within which the cultural industries operate, whether it be within China, regional, or global, will be increasingly freed of the constraints of state intervention.
Similar to the overall economy, the Chinese government is determined to take a less hands-on approach to the burgeoning cultural industries.
62 4.2 The Paradox of China’s Cultural Industrial Policies
As revealed from the previous discussion, the Chinese government holds two attitudes towards the development of cultural industries in the context of international economic integration. The two approaches are contradictory by nature, and together constitute a paradox of China’s cultural industrial policies. Nick Knight (2006) explains this paradoxical approach that the Chinese government has taken towards the
Chinese culture and cultural industries well: on one hand the government is eager to expand cultural market to global force for the purpose of development, while on the other hand being cautious and discreet in its actual actions for the concerns of cultural homogenization and cultural fragmentation. Specifically, the paradox is exhibited through the contradiction between two strategies taken simultaneously: the de facto cultural exception strategy in foreign cultural trade policies and the ambitious cultural development plan in domestic cultural industrial policies.
The WTO agreement of China regarding cultural industries has revealed that although
China has not declared a formal cultural exception strategy, China has achieved an exception for cultural industries in practice through the scheduling of commitments and domestic regulatory means. Meanwhile, although the possible negative effect of liberalization in cultural market and industries - cultural homogenization and fragmentation - have created concerns for China's leaders, the Chinese government is eager to take advantage of the cultural and creative economy as a new engine for economic development. And because further development of China cultural industries
63 requires inflow of advanced technologies, capital and experiences from mature foreign cultural companies and practitioners, the Chinese government shows ambition to create the inflow through progressive opening-up of the cultural market and increase of cultural exchanges and exports, which is reflected in many guiding governmental documents as illustrated in the earlier section.
This implicit cultural exception strategy and the ambition to accelerate the cultural industries' development through international economic integration constitute the two major components of China's cultural industrial policies. Each of the two components has its own motivations and rationales, and stands solid on its own right. However, when the two components are placed together, a paradox comes into view: while the cultural exception represents a cautious (if not conservative) approach towards the development of cultural industries in a increasingly integrated world, the cultural ambition of China echoes with the sound of liberalists that denounce the practice of cultural exception. The two contradictory approaches reflect both uncertainty and ambiguity in the formation of China's cultural industries, implying that the Chinese cultural policy-makers are not quite determined and certain about the correct route for the development of cultural industries that would be suitable regarding China's specific circumstances.
This paradox of China' cultural industrial policies has a twofold implication: 1) it is normal to expect domestic cultural policies to have social arts residues that relate to
64 politics and ideology rather than foreign cultural industrial policies, but in the case of
China, the reverse seems applicable. 2) It is normal to expect consideration of international economic competition should be stronger in cultural trade policies rather than domestic cultural polices. However, the reverse also seems true. This paradoxical stance on cultural industry reveals that the domestic and foreign cultural industrial policies are intermingled in China, and multiple factors have played behind the scene of cultural policy formation. The multiplexity of cultural industries have in effect led to uncertainty and contradiction in cultural policies and its following paradox, which is in fact a genuine reflection of the Chinese government’s gradual shifting understandings of culture and culture industries under the very reality of the
Chinese society: transitionality – the special conditions of China resulted from a shift to market economy system. China’s society has been undergoing dramatic transformation since the adoption of the reform and opening-up polices in 1978, which implies that the cultural industries are subject to the ups and downs of outer economic, political, and social environment, which greatly defines the nature of the
China’s cultural industries and all cultural policies that the government has taken, both domestic and foreign. As China is the first communist country to adopt a market economic system, every step the government takes in transforming its previous planned economic system is experimental and a new adventure. Therefore, for the sake of maintaining the hailed ideology of socialism among the people and ensuring the CPC’s authority and political stability, the Chinese government is cautious and discreet in the process of reform and trade liberalization. Such caution is also applied
65 to the cultural system reform and opening up of the cultural market, maybe to a greater extent than in other realms of society. This was exactly the essential reason that drove the Chinese government to take the quasi-exception and quasi- liberalization stance on its cultural industries in its progressive liberalization process.
Unlike Canada or EU that explicitly endorse a cultural exception strategy to their domestic cultural industries largely for sociological concerns, the motivation that leads China to pursue its paradoxical position in cultural industries is not only socio- cultural concerns that defend cultural integrity or national identity, but also economic concerns that aim to protect domestic cultural producers, as well as to utilize the cultural industries as a new engine of economy development in the potentially global cultural market.
Essentially, the paradoxical treatment towards cultural industries derives from the very reality of modern China, which is undergoing drastic transformation in almost every respect of society and people’s life, as well as the specific nature of China’s cultural industries that was formed upon this reality. As China’s current cultural industries are an indirect outcome of the overall economic reform and opening-up program initiated thirty years ago, they are shaped by a series of drastic political and economic administrative measures, as well as many other contributing factors such as the pressure to keep in line with international standards and measures, domestic expectations to stay ahead of the new cultural and creative economy, etc. The industrialization of culture is becoming an important part of the entire socialist market economic system (Jin, 2005). China’s accession to the WTO in 2001 was a
66 culmination of the governments’ trade liberalizing efforts to adopt market economic mechanisms and take advantage of economic globalization. Thus, the developing route of China’s cultural industries is shaped not only by the force of cultural system reform, but also the force of trade liberalization domestically and internationally. All of these interacting factors collectively add up to the mulitiplexity of China’s cultural industries, which could be examined to illuminate the formational process of China’s cultural industrial policies. In next chapter, Kingdon’s policy window model would be drawn to build a analytical framework that could integrate all the major factors of
China’s cultural policy formation and cultural industrialization.
67
CHAPTER 5
CHINA’S CULTURAL POLICY FORMAITON AND CULTURAL
INDUSTRIALIZATION: AN ANALYTIC FRAMEWORK
In the previous chapter, we come to a tentative interpretation of the Chinese government’s stance and approach to cultural industries under the context of international economic integration. Although the Chinese government has perceived the cultural industries as a very promising field for the country’s economic development and is willing to take advantages of international economic integration to develop its cultural industries, the actual measures taken to develop and liberalize the cultural sector remain rather limited and conservative. The learning-by-doing nature of the cultural industrialization process exhibits both ambition and concerns on the liberalization of the cultural market, revealing a policy paradox during the process of cultural industrialization. In this chapter, the researcher will attempt to locate the reasons and causes of the paradoxical stance taken by the Chinese government through identifying important backstage factors that have played key roles in China’s cultural policy formation and cultural industrialization. To achieve this, the working analytical framework introduced in Chapter two will be examined in detail to present a holistic picture of China’s cultural industries.
68
Figure 2: A Working Analytical Framework of China’s Cultural Policy Formation and Cultural Industrialization
69 5.1 The Problem Stream: The Pressing Demand of Global Harmonization
The problem stream of China’s cultural policy formation and cultural industrialization is closely related to a major historic event in China’s modern history: the WTO accession. The WTO accession of China in 2001 did not simply grant the country benefits of international trade organization membership, but also posed serious challenges and required China to readjust many aspects of its current economic and legal systems. In the realm of cultural industries, how to restructure the domestic cultural industries to come in line with international standards and prevent domestic cultural companies from marginalization by international competition, is a serious challenge for the Chinese government. Cultural industries are not a simple combination of different cultural sectors, but rather a systematic reflection of all the existing cultural relationships within a society (Hu, 2003). Thus, the restructuring of cultural industries is in fact a readjustment of cultural rights and interests under the surface. China’s cultural industries evolved from the cultural administrative system under the planned economic administration. As a result, the pattern and structure of
Chinese industries still exhibit some obvious features of the original cultural administrative system, which in turn reflected the government’s power to control cultural resources allocation for the sake of ideology. Restructuring of cultural industries thus means modifying the existing cultural power system (Hu, 2003).
One the other hand, the entry of WTO could require the Chinese government to implement the WTO agreement in an effective and uniform manner by revising its
70 existing domestic laws and enacting new legislation fully in compliance with the
WTO Agreement. The upgrading of legal system started long before China’s accession. Before 2001, the National Congress of People and the regulating body of the government had passed a series of legislations related to cultural industries and revised some existing regulations to minimize conflicts between domestic rules and international rules once the WTO’s membership was granted. Important regulations and legislations that were carried out during these period included: the Copyright Law of the People’s Republic of China in 1990, and Provision on the Implementation of the International Copyright Treaties in 1992, Regulation on Audiovisual Products in
1994, Regulations on Administration of Films in 1996, Regulations on Broadcasting and Television Administration in 1997, Regulations on Publishing in 1997. Later in
2001 – the year China’s WTO accession was granted – most of these regulations were all revised soon after the entry of WTO to adjust to new demands and requirements presented by the entry. It is expected that additional important regulations and rules will be enacted. The revisions and upgrades of the legal documents concerning cultural polices are reconsideration of the cultural relationships within the Chinese society to make the “socialistic culture” compatible with the market economy system and the governing rules of the WTO.
In fact, the negotiation on WTO accession has accelerated the progress of China’s cultural industrialization and liberalization of its cultural market. In order to conclude the long and arduous negotiation and take advantages of international economic integration, the Chinese government constantly adjusts its polices to be more
71 compatible with the market mechanism and the pressing demand of the WTO rules.
This demand of global harmonization did in effect open a problem window for
China’s cultural industrialization, and with interactions from the political and policy streams create a propitious period for restructuring of the cultural system and speeding the development of the cultural industries.
5.2 The Political Stream: Approving for Cultural Industrialization
The political stream of China’s cultural industrialization is formed when the CPC party started to approve proposals for cultural industrialization. Unlike the political system of the United States where Kingdon described his conceptions of political stream, the Chinese political system stands in great contrast from the typical western political system. Factors that might play important roles in forming the political stream in the western system such as change of administration might not have great impact or become irrelevant in the Chinese political system. Since the Chinese government is a de facto single-party system in which the Communist Party of China is the single dominant party forming the government and other parties are prevented from taking power by law and practices, the political stream is not formed because of ideological and value changes following a shift of administration. It usually comes into existence when party leaders within the CPA endorse certain changes in policies or political strategies. In other words, the forming of the political stream for cultural industrialization must first have ideational change about the culture system and procure political approval from the CPC.
72 This ideational change and political approval of cultural industries took many years.
It started soon after 1978, the year when China officially adopted the reform and open-up policy. Not long after the government started implementing its ambitious strategy to shift from a planned economic system to a market economic system, the issue about how a Chinese culture should fit into a market economy with socialist characteristics started to emerge. China’s authority responded with determination to transform the cultural structure. In 1979, Deng Xiaoping’s opening speech in the
Fourth Assembly of Chinese Literature and Arts Workers’ Representatives became the theoretic base for the culture structural reform. (Pan, 2006). Then, in 1980, the report for National Meeting of Directors of Cultural Bureau stated to “strategically reform the cultural undertaking system”, and “transform the managerial system”(Pan,
2006). Eight years later in 1988, the Ministry of Culture and the State Administration for Industry and Commerce co-published an importance document – Notice on
Strengthening the Regulation of Cultural Industries, in which the term “cultural market” was for the first time officially written into governmental documents (Li,
2008). Till this time, the reform in the cultural realm had lagged far behind the economic reform in other sectors, and achievements were limited. The slow progress in the cultural system reflects a natural resistance to ideational changes in government and the public cultural institutions. Just like Li (2008) has argued, “culture is different from economy, it belongs to the ideological realm, and is tightly connected to ideology. A ruling party can allow cultural diversity to certain extent, but can never allow culture and ideology to run onto an abnormal track.” Reforming the culture
73 requires cautious thinking and steps, and such caution and uncertainty became the
“handcuffs of the cultural reformers”.
These ideational impediments to the cultural reform were finally removed after two historic events in China’s political history. In January 1992, at the crucial juncture of
China’s reform and opening-up program, Deng Xiaoping, the chief architect of
China’s reform and opening up program, paid an inspection tour to south China where he delivered a series of speeches aimed to clarify the muddled idea about whether the establishment of special economic zones is of “capitalism” or “socialism”.
These talks were later known as “Talks in the South”. These talks reconfirmed the necessity for reform, and took off the imagined handcuffs that hindered the deepening of reform (Chen X. , 2002). The reform of cultural system, of course, was in the minds of the China’s high authority. In 1996, the opening of the 14th National
Congress of the CPC marked a seemed important turning point for the attitudes towards development of culture in China. During the Sixth Plenary Session of the
14th Central Committee of the CPC an important document named: The Central
Committee of CPC’s Decision on Issues Regarding the Improvement of Building a
Socialist Spiritual Civilization was released, in which the mission of the reform of the cultural system and a series of guidelines were set up. The decision pointed out: cultural reform must “adhere to the intrinsic rules of cultural development, exploit the positive effects of market mechanism”. Finally, after almost twenty years, the mechanism of market economics, which has been applied to other sectors of the economy much earlier, was finally introduced to the cultural sectors.
74 On October 11, 2000, the central committee of CPC approved the proposal of the
Tenth Five-Year Plan, and the term ‘cultural industries’ was formally written into an official document of the CPC party. The Plan pointed out the need to improve cultural industrial policies and strengthen cultural market construction and regulation, accelerating the development of cultural industries. The adoption of the term by the
CPC signified that the Communist Party of China officially and theoretically gave recognition to cultural industries and their importance within the whole economic system. This political approval has far-reaching implications and is decisive for the reform of cultural system (Han, 2005). Thus till then, just right before China’s WTO accession, the ideational change marked by political approval for cultural industries by the CPC and the Chinese government was almost completed. Cultural industries were officially incorporated into China’s agenda of development.
From above, we see that the political window for cultural industrialization was not always open. It opens when major political events happen that create a propitious period to push for the reform in the cultural realm, or a pressing problem requiring actions from the government such as the accession into the WTO. The cultural industrialization process is a complicated interaction of multiple factors. When the problem and political window opens, proposals and alternatives must be ready to be considered and chosen to actually become policies.
75 5.3 The Policy Stream: Reshaping the Cultural Landscape
The problem and political streams together do not make policies hit the action agenda. In order to get a policy into the final action agenda, policy alternatives must be well prepared beforehand by policy specialists and intellectuals, and must stand ready for use when the policy window is open and opportunities appear. In a typical western political system, the policy entrepreneur plays a key role in making these opportunities and pushing for a policy alternative. However, there are no identical policy entrepreneurs in a Chinese political system. Initiatives and alternatives are generated by think tanks inside the State Council, and after endorsement by the
Communist Party’s Central Committee, they are presented to the primary organ of state power – the National People’s Congress (NPC)8 – for approval. After approval, these alternatives become policies and will be carried into execution by all levels of government. With regards to the cultural industries, there are three major government administration authorities under the State Council – the Ministry of Culture (MoC), the State Administration of Press and Publication (SAPP) and the State
Administration of Radio, Television and Film (SARFT). These three government bodies regulate cultural institutions and companies under their jurisdiction, and are responsible for formulating policies for the segments of cultural industries that they regulate. Although policies generated by the three government institutions might vary
8 The National People’s Congress is the highest organ of state power in China under the Chinese Constitution. It meets annually for about two weeks to approve major new policy directions, laws, the budget, and major personnel changes. When the NPC is not in session, its permanent organ, the Standing Committee, exercises state power.
76 according to different nature and requirement of specific industries, two guiding principles could be perceived across these policies: structural readjustment and production capacity building, which are the two major components in the policy stream of China’s cultural industrialization.
Figure 3: The Policy Stream Components
77 Structural Readjustment
Following the gradual political approval for cultural industrialization, China’s administration body responded with measures to keep in line with the ideational change in the political stream. Structural readjustment was a major approach taken to achieve the objective of cultural industrialization. In fact, the policy to reconfigure the structure of the cultural system is not unique or special, but is rather embedded within the context of drastic economic system reform. Many sectors of the economy also underwent great transformation from planned economy to market economy after the reform and opening up policies were adopted in 1978. Similar to other sectors, the prerequisite for structural readjustment was to change the government’s role in the cultural realm, requiring the government to split the function of regulation and operation, and to stop being the omnipotent player that takes care of everything regarding culture. The shift of governmental role requires the government to simply play the role of regulator instead of producer, as what usually happens in a market economy. This change is a natural outcome of the shift from planned economy to market economy, as now culture is not to be simply regarded as an undertaking that is closely associated with ideology, but also be treated as industries and sectors that engender economic values, with market mechanism being applied to propel their development.
In addition to the change of governmental role, the structural readjustment in cultural system happened in two areas: regulatory readjustment and industrial readjustment.
78 Regulatory readjustment is series of restructuring in the government to keep in line with the development in the political and problem streams and to better answer to needs of industrial development. For example, as a practical step, the Ministry of
Culture reshuffled its regulatory body of the cultural system to adjust to the new requirement for cultural development, which was exemplified by two establishments within the ministry. In 1989, approved by the State Council, the Department of
Cultural Market was established under the Ministry of Culture, whose main responsibility is to conduct inspection and research on the cultural market. Thus, the regulative system for the cultural market came into play. Then in 1998, the
Department of Cultural Industries was established as a sub-institution of the Ministry of Culture. Under the direct regulation of the Ministry of Culture, the department carries out the responsibility of formulating cultural industrial policies, laying out developmental strategies and guidelines, and supervising the construction of major cultural facilities and infrastructures. On one hand, the establishments of these two cultural departments were responses to China’s political approval of the cultural market and cultural industries. On the other hand, the creation of these two departments also reflected China’s attempts to keep in line with international trends in the development of cultural industries by creating respective regulatory bodies that might serve future needs.
In the realm of industrial readjustments, the first measure taken by the Chinese government is to convert cultural institutions into commercial cultural enterprises and companies. As mentioned before, culture was treated as an undertaking before the
79 reform and open-up program, and was tightly controlled by the Chinese government through a range of cultural public institutions. These cultural institutions were not sub-governmental agencies, nor State-Owned-Enterprises (SOEs). They relied on budgetary appropriation, and were owned and regulated by the government. Their operations were not based on the rules of market, but rather the will of the government. After the general reform began, some of these cultural institutions were converted into SOEs through administrative orders and became key players of the current cultural market. However, because these cultural companies were the direct outcome of administrative rearrangement, their positioning in the cultural market remained unclear. As a result, uncertainty about the legitimacy still remained in the minds of cultural practitioners. To remove such mental impediments that hinder the further development of cultural industries, the CPC stepped out to explain their position in culture and cultural industries. In 2002, the Report of the 16th National
Congress of the CPC clearly separated the culture into two components – the cultural undertakings and cultural industries, and two sets of policy measures were conjured to support the respective parts of culture. Cultural undertakings mainly refer to cultural public institutions, whose function was to provide public cultural goods that cannot be satisfied by the market force. For cultural industries, which mainly refer commercial cultural companies and institutions, the market should play the key role in resource allocation, and the government should provide consultations and exercise the function of market regulation (Wang, 2005). This differentiation was important in the development of Chinese cultural industries in that it provided a theoretic basis for
80 the coexistence of cultural undertakings and cultural industries, and cleared the ambivalence in cultural practitioners’ minds.
Another significant measure of the industrial restructuring was modifying the ownership structure in cultural industries and relaxing market accession for private and foreign cultural capitals. Since the beginning of China’s cultural industries, cultural companies in China were almost all state owned, as they were all transformed into enterprise from cultural administrative institutions. Private and foreign capitals were not allowed to invest in the cultural realm that was usually considered to directly related to ideology. The economic efficiency of the industries remained low and lots of cultural resources were lying idle(Zhang, Hu, & Zhang, 2004). Although the situation has improved after the reform and opening-up program, the ownership structure of the cultural industries still leave much to be desired. According to Hu
Huilin(2003)’s study, by 1999, there were 330,700 cultural industrial institutions that were affiliates of the Ministry of Culture, employing around 903,000 people.
However, cultural industrial institutions that were non-affiliates of Ministry of
Culture were only 97,000, employing around 230,000 people. These figures show that state-owned cultural enterprises still take up the lion share of the industries, resulting that the cultural industries are lack of vitality and many cultural resources are underexplored. One of the important actions taken to address this problem was instituting a stockholding system in cultural SOEs, and converting them into stock companies to revitalize cultural enterprises (Pan, 2006). Another action was
81 modifying the access qualification requirement to mobilize the nonpublic sector and foreign companies to invest and accelerate the development of cultural industries.
For example, in the film industry, the SARFT promulgated in 2003 the Interim
Provisions on the Access of Operational Qualifications for Movie Production,
Distribution and Projection. Article I clearly states that: “The present Provisions are formulated to mobilize the non-government sectors to accelerate the development of movie industry, cultivate market subjects, regulate market access, increase the overall strength and competitiveness of the movie industry, promote the flourishing of socialist movie industry, and meet the people’s demands on their spiritual and cultural lives.”, and article III mentions: “The foreign investors are allowed to, by having share of the existing domestic state-owned movie production entities, establish movie production companies by means of joint venture or cooperation.” In the same year, the SARFT also promulgated the Provisional Regulation on Investment in cinema by
Foreign Investors in order to “adapt to the needs of the reform and opening process, to absorb foreign capital, to introduce advanced technology and equipment, and to promote the prosperous development of the film industry of China”. These regulations showed the SARFT’s intention to adjust the ownership structure in film industry and bring in more private and foreign investment to stimulate the sector’ development. Such measures are compatible to the government’s plan of the overall economic reform and trade liberalization, as reflected in government’s work reports:
82 “We formulated and implemented a series of policies and measures to foster a
legal framework and market environment conducive to fair competition, and
encouraged, supported and guided the development of the nonpublic sector,
which includes individual-proprietorship businesses and private enterprises.
As a result, the nonpublic sector of the economy is playing an increasingly
bigger role in stimulating economic growth, creating jobs, increasing tax
revenue, and invigorating the market”(Wen, Report on the Work of the
Government 2008, 2008).
Production Capacity Building
From above, we see that the restructuring of the cultural system has been regarded as one of the priorities during the process of cultural industrialization. However, simply restructuring the cultural system could not necessarily lead to competent cultural industries that could answer the increasing domestic demand of cultural consumption, or face the challenges of foreign cultural conglomerates after China’s WTO accession.
In order to prepare the domestic cultural industries for vigorous international competition, the Chinese government focused on increasing the capacity of cultural production, and the major measure was the formation of cultural groups.
Administratively, the Ministry of Culture ordered mergers between key state-owned cultural companies, for the purpose of increasing size of cultural companies and ultimately achieving economic of scale. These administrative orders resulted in a wave of mergers and conglomeration of cultural companies within the cultural
83 industries. These merged cultural companies become the pillars of the sector and bear the “mission” to compete with the formidable international cultural conglomerates.
By early 2002, including the establishment of China Radio and Television Group and
China Publishing Group, more than 70 cultural groups were established around the country, including 38 newspaper 10 publishing, and 12 radio and television, 5 film groups (Pan, 2006). The formations of these groups reshuffled and transformed the existing cultural institutions by utilizing mechanisms of market economy, while at the same time accelerated the integration of different segments within the cultural industries.
5.4 The Coupling Effect: The Map of Cultural Industrialization
From the discussion above, we see that the process of China’s cultural policy formation is affected by many interrelated factors. The joining of the problem, political and policy streams open up the policy window for China’s cultural industrialization and shape the cultural industries into its current fashion. Among those factors that form the three streams, four factors have exerted paramount impact during the industrialization – global harmonization; ideational change; structural readjustment and production capacity building. These four factors collectively constitute the core of China’s cultural industrialization and provide a theoretic framework for explanation about China’s cultural policy formation and cultural industrialization. Through this framework, we could see how the force of the economic reform and the desire to “open wider” to take advantage of international
84 economic integration have influenced and shaped China’s cultural industries. It also becomes clear that the unique transitional nature of the Chinese society and economic system give rise to the hybrid characteristics of the cultural industries and ultimately result in the paradoxical position of the Chinese government in its cultural industrial policies.
As the Chinese culture is now undergoing a grand transformation from “undertaking” to “industry”, the accession to WTO will undoubtedly speed up this great transformation, resulting in deeper cultural management system reform and a more open Chinese cultural market. It is not a negative cultural acceptance, but more of an important strategy choice after long and careful deliberation for the development of
China. However, for China’s cultural industries, simply building the policy window does not complete the industrialization process. It only represents the phase I of cultural industrialization – from 1978 to 2001. Due to the multiplex nature of the cultural industries, many cultural policies that were formed during this period were resulted from different forces and causes at that exact moment, and they might not hold effective afterwards. A new phase of cultural industrialization emerges and presents issues and concerns that, if solved successfully, could lead to completion of the industrialization process and open a new window for industrial development.
Chapter Six will discuss this new phase of cultural industrialization and below are the major points of the phase I:
85 1. China pursued a cultural industrialization policy for thirty years between 1978 and
2001, which was driven by the domestic force of economic reform and the desire to actively participate in global cultural trade through joining WTO.
2. To do this, China has to construct a policy window for cultural industrialization within China.
3. Key parts of this policy generation were the ideational component and the avoidance of an explicit/formal cultural exception policy in cultural trade relations.
4. The success in building this policy window to prompt domestic cultural industrialization and integrate China's cultural trade activities into the international system also resulted in a domestic/international paradox for China's cultural industries and policymakers. The paradox becomes the base of a new policy pattern in phase two of China’s cultural industrialization policy.
86
CHAPTER 6
THE NEW PHASE OF CULTURAL INDUSTRIALIZATION – CHINA’S
CULTURAL INDUSTRIES IN THE TWENTY-FIRST CENTRUY
As discussed in Chapter 5, the policy window of China’s cultural industrialization has been opened through the coupling of three streams. The joining of the problem, political and policy streams facilitated the formation of China’s cultural industrial policy and cultural industrialization. This transformational process of cultural industrialization has largely reshaped the cultural landscape of China, as the cultural system shifts from ideology-oriented to market-oriented. From updating the domestic legal system to keep in line with WTO rules to restructuring the cultural system and building production capacity, the Chinese government has taken multiple measures to industrialize the country’s cultural sector as the policy window of cultural trade opened. However, the story of cultural industrialization does not end after the opening of this policy window, and the opening of this policy window simply means that the subject of cultural industrialization has become an official policy and is incorporated into the agenda of China’s development. It remains unclear how the policy of cultural industrialization has been implemented and what actual effects the policies have exerted on the cultural production system. More importantly, the question of how the
“new” cultural industrial system is working remains ambiguous, as the insufficient
87 economic data of cultural industries on paper could not be reliable indicator of the system. To better understand these issues, we need a new perspective on the cultural industrialization.
6.1 The Reconfiguration Phase of Cultural Industrialization
Cultural industrialization could be perceived as a long and complicated process that consists three different phases: germination, assimilation and reconfiguration.
Germination refers to the initiating stage when ideas are planted. It is closely related to what happened in the political stream that gave the ideational approval for cultural industrialization. Assimilation is related to the actual process of transforming the cultural sector from an ideology-oriented system to market-oriented economic industry. The assimilation process has two aspects – internal assimilation and external assimilation. Internal assimilation is to incorporate the market mechanism into domestic cultural industries, while external assimilation is to match up with international standards and competitions. The germination and assimilation of cultural industrialization have already been conducted and are reflected in the policy window model, however, the last stage of cultural industrialization – the reconfiguration stage
– is still ongoing and requires careful management.
Reconfiguration is the re-mending and fixing of the existing industries that come from the previous stages. It focuses on components of the system that do not work or have been proven to be ineffective. On this stage, many segments of the cultural industries – those that are perceived by the government as suitable to be
88 commercialized will be transformed into economic entities and be fully run by market mechanism as opposed to administrative orders, making the domestic cultural industries compatible with international rules and regulations. It also implies a thriving domestic industry that holds competence on the global cultural market.
However, due to the specific nature of China’s economic system, this reconfiguration stage of cultural industrialization appears to present more difficult challenges than the previous stages. For example, the transforming of public cultural institutes into commercial cultural companies is hardly complete. Many cultural institutes are provided with a new name and a new mechanism of functioning, but they are not empowered with the ability to fully take advantages of the new mechanism.
Moreover, at this stage, problems that appeared in the earlier phases could be corrected and constraints hindering the development of cultural industries can be removed. As the political window was opened in the previous stages to allow the initiation of cultural industrialization, the process also produced a policy paradox that is becoming problematic in the new phase. New cultural policies need to be generated to fix the paradox during the new phase of cultural industrialization.
The new phase of cultural industrialization requires cultural policy entrepreneurs to take measures to keep the cultural industrialization policy window open and create another propitious period for industry development. In order to achieve this and wrap up the reconfiguration stage of cultural industrialization, the Chinese government has several important issues to deal with including: policy evaluation and modification, creative human capital cultivation, and regulation system update. Through effective
89 handling of these issues, the Chinese government could open another policy window for China’s cultural industries – the window of cultural development, which is a future stage when cultural industrialization is accomplished and the major focus shift from reform to growth. Please see figure # that exhibits the two phases of China’s cultural industrialization.
Figure 4: The two phases of China’s cultural industrialization
90 The Creative Human Capital Cultivation
One of the biggest issues for the reconfiguration stage of China’s cultural industrialization is the building of creative human capital pool. The cultivation of a creative class is crucial for the new-coming creative economy (Florida), and thus paramount for the development of the cultural industries. The development of cultural industries is not a linear accumulation. The country that controls the key factors of the industry is the country that could possibly make breakthroughs (Zou & Xu, 2006).
The core of cultural industries lies in creative talents who create high-value added cultural products and cultural services. Creativity is certainly the paramount attribute for cultural practitioners. In fact, the creative class and human capital dimension are also important in the earlier stages of cultural industrialization. Making effective cultural policies, producing competitive cultural products, and managing cultural system reform now require creative cultural managers and practitioners that understand well the specific circumstances of China as well as international advanced practices and experiences. A new system on paper is not insufficient to effect a full transition from the “cultural cause” to cultural industry. Although laying down the ideational framework was crucial, completing the process of cultural industrilization demands that future cultural policymakers, managers, and creative workers must have a solid understanding of the mechanisms of the new system, as well as the supporting infrastructures.
91 In this new phase, the Chinese cultural industries are facing both opportunities and challenges. On one hand, China’s WTO accession could bring a great opportunity for the cultivation of these new creative talents, as the entry of WTO will result in a richer menu of cultural choices in the domestic cultural market, which might possibly stimulate the creativity of the general public as well as cultural practitioners.
Moreover, cultural exchange opportunites will not only increase, but will be more accessible and unrestricted. The joining of different cultural values, different ideas and thoughts in China’s cultural industries and market could lead to a more conducive environemnt for creativity, which will in the end contribute to the cultivation of a creative class in China. On the other hand, the entry into WTO might initiate a talent hiring competition between domestic cultural companies and international cultural producers. The core of cultural industries are creative talents, including not only cultural products creators, but also professional cultural industrial managers. Due to historic reason, China’s pool of creative talents for cultural industries is relative small. Because the cultivation of creative talents requires a long time period, the lack of creative talents could not be solved in a short period. As international cultural companies storm into China’s cultural market, their instant need for local experienced and professional creative talents might lead them to utilize desirable contracts and bonuses to attract local talents, worsening the talent loss situation of China’s domestic cultural industries (Hu H. , 2001).
92 Intellectual Property Rights and the Regulation System
Another big issue of China’s cultural industries in the new phase is related to the intellectual property rights regulation. Intellectual property protection is a significant factor that affects the development of cultural industries. China was once labeled as the world’s counterfeiting machine (Coy, 2000), and it now has to accelerate the process of legislation and actual protection in interllectual property rights, which would ensure a conducive and healthy environment for the development of cultural indsutries. In fact, the issue is not only a concern for foreign cultural companies doing business in China, but also a big concern for domestic cultural companies, as effective protection of intellectual rights can ensure a conducive environment for the growth of domestic cultural companies. China’s accession into WTO requires the country not only to liberalize trade and remove restrictions, but to accept the rules and principles, and even culture of the WTO (Hu H. , 2004). According to China’s WTO commitment, China agreed to implement the TRIPS (Trade-related Aspects of
Intellectual Property Rights) Agreement in full from the date of accession. In the
TRIPS agreement, there is a basic principal of transparency, which requires every signatory country to take up the responsibility and put their efforts into the protection of intellectual property rights under international inspection. Entry into WTO could provide an external warning sign that helps improve the sense of IPR protection among cultural practitioners and cultural institutions, and is also a good chance to rectify some disordered conduct in the cultural market, and reduce cultural relic smuggling, piracy, and illegal publications.
93 The disparity in intellectual property regulation is indeed an reflection of the disparity between China’s cultural indsutrial regulation system and WTO rules. Like the overall economy, China’s cultural industries are still on a transitional stage. A sound cultural industrial macroeconomic regulation system, mainly through cultural industrial policies, and legislations concerning the cultural industries, is still far from reality. Burdened with deep administrative traits that derived from the previous planned economic system, the regulation system for cultural industries is incompatible with WTO rules in many aspects. The WTO rules require transparency and certainty in domestic cultural polices that might affect cultural trade and service, however, in these area, China still lags far behind the international standard. For example, the wording of many cultural regulations are ambiguous, which do not set up clear and easy-to-follow guidance for both domestic and foreign cultural practitioners. If not addressed, such problems could provoke disputes on cultural trade and services in the future9. Using the analogy of Thomas Freidman (Friedman,
1999), if the model of plug – china’s cultural macroeconomic regulation system – cannot fit into the standard of the global system, China’s cultural industries are bound to have a harsh time in the rigorous international competition.
Policy Evaluation and Modification
The Chinese government has to constantly conduct policy evaluation and assessment and keep readjusting existing policies to make them more compatible with WTO’s
9 See the case of U.S. complaint on China’s film importation in next section.
94 rules and responsive to China’s special circumstances. In fact, the policies and alternatives that were generated during the propitious period when the phase I policy window was open do not hold effective all the time. There are times that the existing policies could not achieve the original intended objective due to the changes in the dynamic environment. For example, in August 2009, a WTO dispute settlement panel ruled in favor of a US complaint over China’s imports of publication and audiovisual products. The ruling upholds US allegations that certain measures of China have constituted restrictions of imports and are inconsistent with WTO regulations. These allegations poke at the implicit restrictive measures that have been listed in earlier
Chapters. One example will be the fact that the Chinese government only assigns the rights of film importation to two companies, and both of them are state-owned companies. The ruling of the dispute has shown that the implicit measures that China has taken to protect domestic cultural industries could not be a long-term strategy and adjustments have to be made in the arduous process of cultural industrialization.
6.2 Other Opportunities and Challenges of the New Phase
Effective handling of the above issues is key to finishing the reconfiguration stage of
China’s cultural industrialization and thus opening up a new window for the development of cultural industries. This new phase starts at the year of 2001 when
China officially obtained its WTO membership, which was the culmination of
China’s trade liberalization and economic reforms, and also a milestone of the cultural industrialization process. The accession of WTO inaugurated a new high
95 growth period, during which Chinese government seems to be much more eager to take advantage of the opportunities presented by WTO membership and stepped onto the stage of global cultural market. Accordingly, this new phase of cultural industrialization and development provides a golden opportunity for the government to readjust the incompatible cultural structure and perfect the market mechanism of the culture system. Through introducing competitions to invigorate the industries and increasing the inflow of high-value foreign capitals, technologies, and professional experience, the accession to WTO could possibly reshape the landscape of China’s cultural industries.
Opportunities
One opportunity for China’s cultural industries is related to what happened in the political window. The political window is concerned about the ideational change and direction of the cultural industry. As the contribution of cultural industry to the overall economy grows, the cultural industries get more weight on the political agenda of the Chinese government. From the perspective of the Chinese government, the first two decades of the twenty-first century are widely considered by China’s leaders and policymakers as “a period of important strategic opportunities” that
“offers bright prospects”(Jiang, 2002), which must be seized strongly to implement
China’s “peaceful rise” strategy10(Xia L. , 2004). In this “peaceful rise” strategy, the
10 The term “peaceful rise” and ideas behind were formulated by thinktanks in China in mid 1990s, and remained popular among China’s political theorists and scholars. It refers to peaceful development that
96 development of soft power, which often derives from cultural attraction (Nye, 2004), constitutes an important component. To achieve this objective, China’s cultural industries are expected to play an essential role in this development, thus in some sense bearing the mission of China’s peaceful rise (Zhang Y. , 2005). It implies that in the new phase of cultural industrialization, the cultural industries could possibly receive more favorable treatment from the government regarding economic development. Meanwhile, the incorporation of cultural industries as a key component into the “peaceful rise” strategy is also an indication that the Chinese industries have experienced enough development and industrialization that they become able to be a resource for other, non-cultural policy goals.
Another major opportunity is that the accession to the WTO can bring in foreign capital, technology, information and professional cultural practitioners, to restructure and upgrade the domestic cultural industries. Currently, the domestic cultural market has a rather small size, which is caused by many factors. The inefficiency in cultural production that results in the imbalance in cultural supply and demand is an important reason. As the domestic cultural market becomes gradually open to the world, the enormous potential of China's cultural market will surely attract foreign cultural enterprise groups to invest, bringing advanced science and technology, as well as advanced management experience and practices. Their high-quality capital, strong financing capacity, and an international marketing network, could certainly invigorate
keeps a peaceful international development, in contrast to acquisition of power through drastic political actions that result in changes of global political structure, or even war.
97 and transform the domestic cultural companies that they invest in. Moreover, as the restriction on market access is gradually removed, international cultural corporations could become more engaged in China’s cultural market. Their advanced management methods and experiences may have a spillover effect across the domestic cultural industries, and shorten the integration process of China’s cultural industries into the world market. Meanwhile, the inflow of foreign capital, technology, and information into the Chinese cultural market is also important in contributing to the adjustment of ownership structure in cultural industries. Through absorbing non-public capital and talents into the industry, a more open and diversified investment mechanism could be settled within the sector.
Meanwhile, the entry into WTO was a “coming out” party for China’s cultural industries. The commitments of China in the WTO agreement not only create opportunities for foreign cultural companies to come in, but also open the door for domestic cultural companies. By reducing obtacles for foreign investers and competitioners, the WTO creates channels for china’s cultural companies to enter the global cultural market. As the Chinese government officially sets up a strategy of
“going global” for china’s enterprises with favorable policy supports, China’s key cultural companies are bound to benefit from this wave of cultural exportation. A good example is the China Arts and Entertainment Group. The state-owned company was founded in 2004 from the administrative merge between China Performing Arts
Agency and China International Exhibition Agency, and is now one of the four national model bases for cultural exports affirmed by the Ministry of Culture. So far,
98 the CAEG has organized 290 programs and 21,000 performances in some 60 coutries and attracting audience totalling more than 28 million11. Also, hosted by Ministry of
Culture and Ministry of Commerce, the China (Shenzhen) International Cultural
Industries Fair (ICIF) has successfully gone through 4 sessions until 2008, and is becoming an important international, comprehensive, cultural fair of China. The fair establishes an exchange platform for Chinese cultural products and projects, and promotes the development of China cultural industries and spreads Chinese cultural products to the world.
Challenges
Although WTO has brought opportunities for China’s cultural industries to catch up with international development, it also poses serious challenges to China’s own cultural industries. As a symbol and outcome of globalization and international economic integration, WTO may cause grave socio-cultural concerns such as cultural homogenization or cultural fragmentation while furthering economic freedom.
China’s cultural industries are a unique product of a transitional society. The challenges of international cultural corporations bring some X factors to the semi- finished cultural industries that are still undergoing transformation from a planned mechanism to a market mechanism, and the effect of which we might still not be able to observe right away.
11 See the report of Outstanding Cultural Export Enterprises released by the website of China Cultural Industries, which is a website of the Department of Cultural Industries. http://plug.cnci.gov.cn/pro/proView_en.aspx?id=t%2Fr5Rkh6rAblokkE%2BHCVe8sPajatKV9P
99 One big challenge facing China’s cultural industries is often mentioned in the supporters of the cultural exception strategy who claim that due to freeing up of the cultural market, international cultural conglomerates, especially American cultural companies, might possibly dominate the domestic cultural market and marginalize local cultural expression. This marginalization of domestic cultural expression could result in an erosion of cultural identity and sovereignty, and lead to cultural homogenization. Many scholars and theorists in China endorse such a claim (Knight,
2006). Regarding the specific situation of China’s cultural industries, there remains a big shortage in cultural products and service supply (Zhang, Hu, & Zhang, 2004). As the restriction of foreign cultural companies is gradually lowered, these international cultural giants, with their high capacity for cultural production, might well take advantage of such a shortage in the domestic cultural supply and fill in the gap by providing their cultural products and services, seizing big market share without facing too much resistance. If this happens, the worries of cultural exception exponents would certainly become a more serious and grave problem for the government and domestic cultural producers, as they find themselves marginalized by the formidable challenges form international cultural companies. The domestic channels for cultural expression, which are always considered important for the formation of a national identity and cultural integrity, will possibly become more narrowed.
Another problem lies in the structure of cultural industries, which was mainly reflected in the fact that the public sector still takes up substantial proportions of the industries, while private and foreign sector only account for a tiny proportion. This
100 imbalance in ownership structure could severely undermine the vitality of the market.
Although the market accession restriction has been gradually lowered after China’s accession of WTO, serious problems emerge from the government’s exact effort to restructure the industries. This problem is clearly illustrated by Hu Huilin (2001). He stated that the measures that the government is using to reform the cultural system and restructuring the cultural industries, like merging and conglomerating cultural companies into cultural groups, were in fact substituting the allocating force of the market with administrative orders. The market force was downplayed during the process, which in effect diminished the role of cultural companies as market entities.
Such measures superficially created large cultural enterprises that look more competitive, but did not fundamentally change the interest structure of the company, nor add new forms of capital other than state-owned capital into the system. The restructuring was just creating a new and larger industry monopoly through administrative power under the guise of market economy. Hu calls this an
“administrative monopoly”, which hinders the possibility of fair competition, and in effect excludes the vigorous private capital that could help China’s cultural industries compete in the post WTO era.
In August 2008, as one of the most significant steps in China’s transition into Market economy – the Antitrust Law just went into effect. It was formulated for the purpose of fighting monopolies, however, as the government tightly holds its right to interpret the law, doubts remain among private and foreign investors about the problem of administrative monopolies. Things could be even worse as such efforts might be
101 perceived as a new face of protectionism (Bradford, 2008), which could become a bigger impediment for China’s cultural industrialization.
6.3 Conclusion
Cultural exception is a strategy utilized by governments and cultural policymakers in international trade negotiations, for the purpose of retaining the right to protect their domestic cultural industries through measures of market access restriction and quotas.
The motivation behind cultural exception is often socio-cultural concern about possible negative effects of international cultural flows that might result in domestic cultural fragmentation or cultural homogenization. Making cultural industries as an exception in trade liberalization agreements helps countries retain their cultural sovereignty and national integrity, and prevents the expression of local cultural voices from marginalized and annihilated by the dominance of international cultural conglomerates.
As cultural industries have gradually moved closer the center of the world economy, and the Chinese government became more focused in the potential of the cultural industries. As China is determined to use the cultural industries to shift the pattern of economic development from an extensive one to a more intensive one that relies on a balanced combination of consumption, investment and exports (Wen, 2008), the cultural industries will be key in adjustment of the pattern of economic development in the strategic period of the 21st century. So along with China’s entry into the WTO, the Chinese government is keen to further open the Chinese cultural market to take
102 advantage of foreign investment and technologies, and advanced management experience to upgrade the domestic cultural industries and get ahead in international competition. However, such cultural ambition did not reflect clearly in the schedule of specific commitments in WTO agreements that are related to cultural industries.
This is due to the specific nature of the Chinese culture, which was considered to be closely related to ideology and should not be affected by the “decadent” cultural influence of the western culture. Such ambivalent attitudes toward culture and cultural industries constitute a paradoxical cultural exception strategy taken by the
Chinese government.
To explain this paradoxical position in China’s cultural policies, a theoretic framework based on Kingdon’s policy window was established to identify the problem, political and policy streams of China’s cultural policy formation. The three streams are formed four key components: global harmonization, ideational change, structural readjustment and production capacity building. Through the coupling of these interacting factors, the policy window for China’s cultural industrialization is opened, and the landscape of China’s cultural industries was re-shaped. This theoretic framework provides a tentative explanation for the paradox in China’s cultural industrial policies. Moreover, it reveals that the paradox in cultural industries is in essence a product of current transitional nature of the Chinese society, which is undergoing a grand transformation from planned economic system to market economic system and gradual opening up of its domestic market to the world. China’s current cultural industries are in fact a product of this reform and opening-up process
103 and shaped by a series of economic and political measures through administrative forces, as it moved from its originally status of “undertaking” to its current position of
“industries.” The force of the economic reform and the desire to “open wider” to take advantage of international economic integration are the ultimate reasons for the paradoxical situation of cultural industries at the present time.
With China’s entry into the WTO, China’s cultural industries officially entered into the global cultural market and a new phase of cultural industrialization. Although the political window has been open for cultural industrialization, the opening alone does not mean completion of the cultural industrialization process. To finish up the process and open a new window for industrial development, there are certain important issues to deal with such as creative human capital cultivation, enforcement of intellectual property regulation, and policy evaluation and modification. Meanwhile, the new phase holds many opportunities for China’s cultural industries, such as better utilization of foreign investment, technologies and professional experiences to upgrade the existing cultural system and structure, speeding up the process of industrial development to keep in line with international standard and trend, etc. On the other hand, the WTO could pose serious threats and challenges for China’s cultural industries such as marginalization of domestic cultural expressions, talent war, incompatible regulatory system with WTO rules, etc. These opportunities and challenges have put on the desk of China’s leaders and cultural policymakers a question of how to achieve a sustainable balance of openness and protection for the very specific reality of China’s cultural industries.
104
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