China will find culture tricky to manufacture

By Wei Gu
October 19, 2010

China may soon have a new export — culture. The Communist Party has named culture as a “pillar industry” in its 12th five-year plan, previewed on Oct. 18. That’s a worthy goal. Compared to former pillars like property and autos, media might actually help the economy rebalance. Yet the Party may find culture a lot more difficult to manufacture than cars and condominiums.

The growth of movies, games, and tourism could be huge. An average Chinese spends just 8 percent of what a typical American does on recreational services in dollar terms, according to Morgan Stanley. Old pillars now look less racy. As many as 88 percent of urban dwellers now own their homes, according to official data, and China is already the world’s largest auto market.

Economies of scale are not hard to come by in a population of 1.3 billion. China may leap above Japan and India in terms of box office receipts to be the world’s second-largest cinema market in 2015, according to the China Film Producers Association. Chinese mobile users sent 2.1 billion short messages a day to each other in 2009 in total, government figures show.

More importantly, media and cultural services fit China’s other goals. They are labour-intensive compared to capital and investment heavy manufacturing sectors. They can help reduce China’s dependence on energy and promote domestic consumption. More exports of Chinese literature and language may even promote better understanding among world leaders, say at the G20 or IMF.

To make the pillar stand up, China must remove some obstacles. Intellectual property still isn’t protected as it should be, which deters producers. A lack of IP reduces the economic rewards to creative types too. Why bother when your ideas can be so easily stolen?

China also needs to take more of a hands-off approach to what the media says. While openness in the press has come a long way, letting a hundred schools of thought contend will fill some conservative policymakers with horror. Yet if China is serious about rebalancing — and one day taking on the economic and cultural supremacy of the United States — that is a risk worth taking.

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Wouldn’t investment in culture stimulate domestic demand more than exports? Why would cultural products necessarily need to be exports for China?

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