I. Existing Policies on Culture Industry Access and Related WTO Agreements

In today's world, along with booming science and technology, stiff competition of overall national strength and accelerating economic globalization, western powers are trying to penetrate other countries politically and culturally, and worldwide cultural diversification is being challenged. In China, the framework of a market economy system is not complete yet, the culture industry is in its rudiment, the culture market mechanism is still not perfect and culture-related legislative work and management also lag far behind. Under such circumstances, how to face WTO challenges, how to develop the refined national culture and to beef up the international competitiveness while assimilating essence in foreign cultures are all big issues to be tackled during the process of developing the socialist culture with Chinese characteristics.

During China's WTO negotiations, cultural market access was one of the focuses in negotiations. In a sense, it was the continuation of China's four-year negotiations of intellectual property protection with the United States and western European countries after China gained membership in the World Intellectual Property Organization. Up till now, China has made universally acknowledged achievements in both the public awareness of intellectual property protection and the related legal system. In the WTO negotiations, the Chinese Government only pledged to abide by the Regulations on Administration of Audiovisual Products for the distribution of audiovisual products (including wholesaling, retailing and rental). Joint ventures may be set up upon approval of the Chinese Government, but the foreign shares in them shall not exceed 49% and audiovisual products they deal in shall pass examination and get approval of the Government.

In respect of theater renovation and construction, China promised that foreign capital up to 49% in joint ventures will continue to be allowed and foreign investors are allowed to take part in business operation and management under the premise that both parties observe China's Regulations on Administration of Film and the Chinese party holds the management right. These pledges together with the terms on foreign capital entry stipulated in China's Regulations on Administration of Entertainment Places and Regulations on Administration of Commercial Performances show that the market access will have far-reaching effects on the Chinese culture industry.

II. Basic Situation of Chinese Culture Industry

Personnel and Organizations

In 1999, China had 33.07 million cultural production enterprises with 1.6615 million employees in total. Art performance troupes totaled 2,632, employing 145,000 people. Art performance places totaled 1,911, employing 440,000 people. Among these places there were 1,893 theaters and cinemas, employing 440,000 people and 47 art exhibition places, employing 13.46 million people, 26 of which were art galleries. China had 2,767 public libraries and 490,000 employees, of which 2,330 were libraries of county level and below county level, employing 26,000 people. It had 389 mass art halls and 12,000 employees. Cultural centers in the country totaled 2,905, employing 44,000 people. There were 42,543 cultural stations nationwide, employing 720,000 people, of which village- and town-level cultural stations totaled 39,719. There were 3,551 organizations in the cultural relic preservation sector in the country, employing 66,000 people; 2,067 cultural relic organizations, employing 30,000 people; and 1,363 museums, employing 33,000 people.

In 1999, China's culture entertainment industry (including song ballrooms, ballrooms, Kara OK halls, e-game playrooms, ping-pong halls, bowling, roller skating rinks, overall recreation areas and so on) had 174,700 units and 903,000 employees. The culture markets and other management organizations totaled 97,000, employing 230,000 people, including enterprises and organizations related to cultural art broking, audiovisual product wholesaling and retailing, video show industry, video tape rental, picture shops and corridors, fine arts companies, art works auction companies, book wholesalers and so on.

2. Booming Development of Art Undertaking

In 1999, China's 2,632 art troupes performed 4,579 items, of which 2,153 were newly created and premiered. Among these, troupes of traditional operas staged 2,724 items, including 1,058 newly created and premiered items. Art troupes staged 423,000 performances across China with each troupe 161 performances on the average. They staged 260,000 performances in countryside, making up 61% of the total. Domestic audiences reached 469 million person-times, and the revenue from performances was RMB4.9 billion.

In 1999, cultural departments in the country boasted 1,902 art performance places and a total of 1.706 million performances were launched at these places with domestic audiences reaching 118 million person-times and performance revenue of RMB114 million.

3. Overall Development of Social Culture Undertaking

In 1999, there were 45,837 mass cultural organizations in China, including 389 mass art centers, 2,901 cultural centers and 42,543 cultural stations (including 39,719 in villages and townships). Mass art centers and cultural centers (stations) organized 94,000 exhibitions, 280,000 literary activities, 138,000 training courses with graduates of 4.64 million people, showed 3.51 million times of video tapes with audiences of 1.06 billion person-times. In villages and towns, mass art centers and cultural centers instructed 23,066 cultural centers, 112,643 cultural clubs, 60,820 libraries, 193,551 households specializing in cultural activities and 31,672 part-time art troupes.

4. Development of Electronic Libraries

Nowadays modern information technologies are widely applied to libraries. Public libraries have improved their conditions and obtained better results. In 1999, there were 2,767 public libraries nationwide with a collection of 395 million books (volumes), including 27.74 million ancient books, 270 million ordinary books, 5,483 newspapers and magazines, 1,362 pieces of micro articles, 890,000 audiovisual documents, 2,195 volumes of foreign-language books and periodicals with an annual circulation of 180 million person-times.

5. Further Reform of Art Education

In 1999, there were 238 education institutions of different kinds in China, including 10 higher art education schools, 141 specialized secondary schools, 20 schools for cultural cadres and 67 other education institutions. In the year, higher art education schools enrolled 2,558 students, produced 1,655 graduates and had 8,631 students on campus; specialized secondary schools enrolled 23,153 students, produced 16,700 graduates and had 77,604 students on campus.

6. New Achievements in Researches of Cultural Science & Technologies and Art Theories

In 1999, there were 240 cultural (cultural relics) scientific research institutions in China with an employment of 5,900 people, of whom 2,854 were scientific research staff with intermediate or senior titles, accounting for 48.4% of the total. Within the year, a total of 614 scientific research programs were completed, of which 12.7% won a total of 78 national prizes and 29.8%, 183 provincial- or ministerial prizes. China's first award for excellent achievements of philosophy and social science after the founding of the New China was successfully issued and was awarded to eight outstanding achievements including one top prize, two second prizes and five third prizes.

7. Smooth Development of Cultural Relics Preservation

China has witnessed outstanding achievements in cultural relics preservation and working staffs in the filed have attached much importance to protection, maintenance and application work as well in cultural relics preservation.

In 1999, China had 1,944 cultural relics preservation institutions, 1,356 museums and 121 cultural relics shops. The country had altogether 1,125 safekeeping and collected articles of cultural relics, including 47,000 top-grade articles; held 2,812 displays and 3,945 exhibitions with a total number of 246 million visitors and a ticket revenue of RMB912 million.

8. Further Development of Cultural Market

In 1999, China had 270,000 culture industrial units, which employed 1.134 people and realized annual profits of RMB22.3 billion and an added value of RMB12.41 billion. In 1999, China had 3,372 provincial-, city- and county-level managing organizations of cultural markets with an employment of 19,712 people. A relatively systematic and perfect management and inspection network was basically established.

9. Remarkable Achievements in International Cultural Exchange

By 1999, China had established cultural exchanges in various forms with more than 160 countries and regions and maintained contacts with thousands of foreign and international cultural organizations. In the first four years of the Ninth Five-Year Plan period, China signed 11 cultural agreements and made 102 cultural exchange plans with foreign countries; the Ministry of Culture approved 4,515 cultural exchange programs, including 2,776 programs of visiting other countries and 1,739 programs of receiving visits from other countries. Chinese artists won 38 gold prizes, 26 silver prizes, seven bronze prizes and 27 other prizes. China held the International Art Theme Year activities annually, introducing a batch of the world's top-ranking art products into China.

10. Bringing into Play the Unique Function of Cultural Exchanges and Pushing Forward Chinese Unification

In the Ninth Five-Year Plan Period, the number of cultural exchanges between the Chinese mainland and Hong Kong and Macao reached 2,078 programs, of which 1,792 involved outbound visits and 286 programs, inbound visits. The cross-Straits cultural exchanges boasted 2,117 programs including 1,424 outbound visits and 193 inbound visits.

In a word, Chinese culture industry witnessed booming development, culture industrial scale kept expanding and the cultural market management was going smoothly after the founding of the New China especially during the two decades after the reform and opening-up. However, due to limited efforts in developing and utilizing cultural resources, unsound industrial structure and small industrial scale, China, as a big cultural country, faces both WTO challenges and increasing cultural demands brought about by developing economy and improving society.

In terms of cultural markets, China made remarkable achievements after the founding of the New China especially during the two decades after the reform and opening-up. Besides the ten aspects concerning culture industrial scale, statistics show that China had more than 3,000 movie release and screening organizations and 120,000 screening units. The number of film showings nationwide hit 34.29 million and ticket revenues reached RMB850 million in 1999. China had over 100,000 book publishing outlets with an employment of over 390,000 people. They published over 15.8 billion volumes of books with the sales reaching some RMB70 billion. From all this we can see that China has a huge cultural market. In terms of organizations in the cultural market, there were 3,372 administrative organizations, 1,257 inspection organizations and a management network covering the central government to provinces, prefectures (cities) and counties. In terms of legislative work, China had promulgated laws and regulations including the Copyright Law, the Regulations on Administration of Audiovisual Products, the Regulations on Administration of Entertainment Places, the Regulations on Administration of Commercial Performances and the Regulations on Administration of the Publishing Industry, over one hundred administrative rules and many local rules and regulations. In terms of economic structure, the mainstay in the cultural market includes State-owned economy, private economy, and joint-stock economy and involves foreign capital, basically forming a multi-ownership pattern.

During the past twenty years, China basically established the theoretic, legal, and management systems in the cultural market. It is proved that the cultural market has played an indispensable role in enriching people's cultural life, promoting material and spiritual developments, further emancipating the production force of cultural arts, boosting the culture industry and promoting Sino-foreign cultural exchanges. However, the cultural market still has many hard nuts to crack, such as smuggling and piracy of audiovisual products, pornography and gambling, tomb robbing and smuggling of cultural relics, counterfeiting of artworks and so on. Therefore, developing the cultural industry, regulating the market and realizing its prosperity are the longstanding and difficult tasks and need concerted efforts from the whole society.

III. Opportunities and Challenges from WTO Entry on Culture Industry

After China's entry into the WTO, the cultural market access range is expanded, and foreign capital, art products and services are allowed to enter China. This will exert influence on values of socialism, outstanding cultural traditions, Chinese living styles, government roles and cultural enterprises.

1. Impact on Values of Socialism

China is a socialist country. The Fifteenth National Congress of CPC pointed out that a uniform ideal and spiritual support should be formed in the whole society, and the country should carry out socialistic moral education, legal education and discipline education to guide people to build up proper world view, philosophy and value judgment and cultivate citizens with lofty ideals, moral integrity, good education and a strong sense of discipline. All this cannot be fulfilled without guidance, education and inspiration of culture. Culture plays a very important role in inspiring national spirit and strengthening national cohesion. In this sense, culture is not only the result of national spirit but also its source of impetus. Cultural products and facilities are the carriers of certain cultural spirit and traditions and are a huge spiritual treasure. On the one hand, inflow of foreign capital, products and services will enrich people's cultural life, improve their living standard and help them assimilate foreign cultural essence. On the other hand, some cultural products that air western individualism, judgment of moral ethnics, philosophy and value judgment will also flood into China and exert negative effects on the education target of cultivating young people into a new generation with lofty ideals, moral integrity, good education and a strong sense of discipline. Therefore, it is quite important for Chinese people to keep cool-headed.

2. Impact on Outstanding Cultural Traditions

Chinese culture has a long tradition and is very colorful. As early as 2,500 years ago, the Chinese people had begun to study astronomy and geography and developed their unique aesthetic philosophy centered on the idea of "harmony between man and nature". In the Chinese history there were many eminent philosophers, politicians, militarists, scientists, litterateurs and artists, who produced a tremendous amount of books and valuable ideas. In the socialist market economy, economic globalization and China's WTO entry will bring in many foreign cultural products. Some foreign cultural products widely make use of modern science and technology and thus enjoy advantages in terms of high entertainment, visual value and knowledge value, and low production cost and price; and people are curious for foreign cultures. Therefore, these products are sure to be well received by Chinese consumers and will grasp a big market share in a certain period. When consumers appreciate foreign cultural products, they will get to know foreign culture and arts, at the same time they will be subconsciously influenced by the idealistic connotations contained in these works and some people will even develop the notion that foreign culture can better embody human's individuality and ego than Chinese culture. In the 1980s, 90% CD programs in Chinese sing and dance entertainment places were from abroad. It took relevant authorities 10 years to fundamentally change this situation.

3. Pressures on Domestic Cultural Enterprises and Institutions

At present, the cultural market mechanism in China is not complete and the industry does not form scale yet. On the one hand, the culture industry has weak production capacity, lacks sufficient capital and good quality; managing professionals are in great shortage and those who not only know marketing and international service trade regulations but also have relatively good business administration skills are even rare. On the other hand, the cultural consumption demand is booming with a big market potential. Spot checks found that in 1990, direct cultural consumption of China's urban households averaged RMB112.09 per capita. While in 1996, the figure jumped to RMB374.95, up 22.29% annually and much higher than GDP growth rate of the same period. Another survey showed that the per capita cultural consumption makes up 15.4% of his/her total income, while in western developed countries such as Britain and the United States, the figure is about 30%. From this we can see that Chinese cultural market has a big potential.

According to the prediction of relevant departments, the potential cultural consuming power in China will be RMB550 billion in 2005. With China's entry into the WTO, much foreign capital will flood into China's cultural market and most of the capital will come from multinationals and companies with strong capital support, advanced technologies and experienced managing staff. While China is transforming from planned economy to market economy and its cultural enterprises have much work to do -- they have to learn how to make full use of the country's rich cultural resources and advantages of operating in their homeland, learn from foreign companies while competing with them.

4. Impact on Government Roles

With the expanding market access, Chinese cultural market will absorb a large amount of foreign capital and even more private capital. With passage of time and development of economy, China will face more pressure to further expand market access for foreign cultural products. This will exert much pressure on governmental departments of different levels, which have got used to managing State-owned economic units with administrative orders. How to identify functions and effects of culture in socialist market economy; how to get familiar with WTO rules, to regulate the market and to develop the culture industry according to these rules; how to guide foreign investments and private investments; how to control foreign cultural products and business activities and so on are all new tasks faced by the governments at different levels. China has a social system and ideology different from those in western countries and there are a big disparity in their understanding and management of culture. The Chinese Government's culture management mechanism is somewhat different with the WTO rules. Revising or abandoning the previous management methods and trying to master new rules might lead to conflicts of notions and disparity between real effects and expectations.

IV. Countermeasures for Post-WTO Chinese Culture Industry

China has a civilization of five thousand years and the Chinese people made quite a lot of efforts to assimilate foreign cultural essence such as introducing Indian Buddhism, Arabian culture and Persian culture into China in the Han and Tang dynasties. Nowadays, in face of challenges resulted from economic globalization and the WTO entry, the Chinese people should remain cool-headed and take feasible measures to assimilate foreign essence to enrich the Chinese culture.

Raising Crisis Awareness and Deepening Cultural Reform

In the past twenty years after China's reform and opening-up, China made great achievements in cultural development. However, cultural reforms have not yet lived up to the requirements of the Central Government and the expectations of ordinary people. China should categorize culture ownerships scientifically and encourage cultural enterprises to enter the market while guaranteeing development of public cultural undertaking. In order to survive the fierce competition, domestic cultural enterprises and institutions should be responsible for their own management decisions, profits and losses and really become market-oriented legal entities and competition entities.

Domestic cultural enterprises and institutions should increase their production efficiency and economic profits, raise managing standards of business operations, provide readily marketable products and services with healthy and colorful contents, and guarantee social benefits and economic benefits as well. Cultural reforms should bring into play market mechanism while meeting people's cultural demands. In the socialist market economy, markets reflect people's different cultural demands, and productions of cultural enterprises and institutions should be market-oriented. The government's role should shift from administrative intervention to regulation and control. The country should optimize the culture industrial structure so as to ensure harmony between culture and other industries and among cultural industries in different regions. What's more, enterprises should develop the notion of fair completion. In the reform, the government should protect intellectual properties under relevant laws and regulations, lay down market rules on fair competition and promote multi-ownership culture industry.

Enforcing Administration under the Law and Beefing up Culture-Related Legislative Work

According to the WTO rules, China should bring its laws and regulations in line with rules of the trading system. At the same time, Chinese should step up study and training of basic WTO knowledge and get familiar with and master WTO rules.

Adjusting Industrial Structure and Improving Culture-Related Policies

Sound industrial structure is the foundation for harmonious development between different industries. China's fledgling culture industry is not only weak but also unreasonably structured and calls for optimization and structure upgrading. Statistics from the Ministry of Information Industry show that Chinese Internet users will reach 60 million in 2003, most of whom are young people, and management of online cultural consumption will become a hot potato. Modern high-tech gradually penetrates cultural products and services and high-tech cultural entertainment items such as computer games, Kara OK, digital TV and digital movie keep emerging. However, high-tech application not only facilitates production and distribution of good cultural products but also serves as carriers of "spiritual trash", making cultural management more challenging. A fraction of lawbreakers employ high-tech and advanced management to vend vulgar cultural products. The more high-tech is applied, the higher structural adjustment is required. For instance, audiovisual products are results of high-tech and combinations of culture and technologies and they develop along with the Internet boom. The development from sound tape to videotape and from VCD to DVD reflects renovations and upgrading.

Therefore, the culture industry should speed up assets reorganization and structure adjustment, optimize allocation of State-owned cultural resources and promote industry upgrading so as to boost cultural enterprises of different ownerships amid fierce competition.

At present, the government should formulate and improve culture industrial policies. Cultural institutions (nonprofit) need government investment, while cultural enterprises (commercial) should be put onto the market and responsible for their own profits and losses. Currently, Chinese cultural organizations are still weak and need government support, especially in taxation and financing policies. The government should adjust its fiscal policies and employ different taxation rates in favor of cultural development, regulate and control the industry's overall scale, encourage multi-ownership cultural enterprises, loosen restrictions on non-public cultural investors and provide low-interest or discount loans to new, renovation-type cultural projects. The government should grant some policy-based lending to different cultural enterprises, and encourage multi-ownership investments in the industry, promote cultural resources protection and break up industrial monopoly. It should provide necessary supports to cultural industries in less-developed regions and promote harmonious development of culture industries in different places, encourage cultural enterprises to seek international market, promote international cultural exchanges and export-oriented cultural products.

4. Strengthening Supervision on Cultural Market

Currently, China's cultural market is not in order mainly due to short supply of cultural products and services. The gap between supply and demand provides an opportunity for lawbreakers to commit illegal activities, leading to market disorder. In view of this, it is urgent for the government to improve relevant policies and encourage active involvement of multi-ownership investments. It should also tighten market supervision and beef up publicity and education of cultural legal system to raise consumers' awareness. Furthermore, it is necessary to launch professional trainings and to raise the overall quality of cultural business managers.

China is a great nation with a long cultural tradition. The Chinese people should grasp every opportunity and embrace different challenges. If only the industry operates in accordance with the requirements established by the Fifteenth National Congress of CPC, develops products and services for the sake of the people and the society and promotes cultural multi-ownership can China fosters a national, scientific socialistic culture.