The new legislation announced on Sunday means the state-run Xinhua news agency will have the sole right to distribute and release foreign news content in China.

Xinhua itself published details of the regulations in full in a report.

The rules said foreign news, pictures and graphics can be sold in China only through agents approved by Xinhua.

Annual reviews to decide whether to renew business licenses of foreign media, are also to be conducted by the agency.

Violations can elicit warnings or a grace period to correct mistakes, while business licenses of foreign news agencies can be suspended or revoked if they break the rules such as publishing objectionable news or directly developing clients.

Punishment threat

The rules said foreign news agencies should not carry reports that endanger national security, fan ethnic hatred and racial discrimination or promote cults and superstition.

News that violates national unity, sovereignty and territorial integrity will also elicit punishment.

The regulations, which also apply to Hong Kong, Macau and Taiwan news agencies, replace a 1996 cabinet decree regulating distribution of financial information.

Xinhua said the new rules were aimed at "promoting healthy and orderly dissemination of news".

China proposed a draft law earlier this year that would impose fines on media outlets if they broke news on emergencies such as natural disasters without authorisation.

Observers said China was seeking to regulate domestic media and publication of foreign news ahead of the 2008 Beijing Olympics.

EU criticism

 

The European Union has criticised the new restrictive controls imposed by China on Monday.

 

EU spokesman Johannes Laitenberger said Beijing's new measures of restricting foreign media access to China's media market was a “real cause for concern”.

 

European commission president Jose Manuel Barroso, attending a summit in Finland, said: “any kind of restrictions on the freedom of the press, increasing the intervention of the state, is a very negative development.”

 

China’s state media

 

The regulations give Xinhua a virtual monopoly over the distribution of news, information and other services inside China.

 

But business, not politics, is driving the new rules, industry executives said on Monday.

 

The new regulations would change the landscape for these businesses, requiring foreign news agencies to distribute information through Xinhua or entities authorized by Xinhua while paying for the service.

 

“They're basically telling the world's information companies that they have to go through a monopoly in order to distribute their products in China,” said James McGregor, chairman of JL McGregor & Co., a boutique investment and consultancy company..

 

“The problem is Xinhua needs money. The big media groups, the big TV stations are rolling in money,” said McGregor.

 

“Xinhua, which is a government propaganda arm, is not rolling in money and they're looking for ways to get rich, to make Xinhua a player.”

 

In a recent speech printed in a Xinhua-owned magazine, the news agency's president, Tian Congming, described economic information as “a new growth engine” for Xinhua.

 

Tian said Xinhua took the idea to the Chinese leadership, who approved the plan.