One Billion Customers - James McGregor [78]
I hyped the hell out of their mistake. I flew to Washington and briefed officials at the USTR, State, Treasury, and Commerce departments and informed key members of Congress. In Beijing, I complained to the ministries of foreign affairs, foreign trade, finance, and several others. Xinhua was bombarded with so much criticism that I expected officials to be wearing helmets the next time I met them.
The battered agency backed off. The Hong Kong handover went off smoothly without a Guangdong information cutoff. Xinhua was now less determined to bludgeon us into submission. They tacitly acknowledged that we could be as thuggish as they could. Now they only wanted to make the problem go away. Within two weeks of the Hong Kong handover, Xinhua agreed that an exchange of letters between U.S. and Chinese government officials would be a convenient vehicle to forge a solution. Richard Pascoe and I were told to back off and exchange no more correspondence with Xinhua. This was now considered a government-to-government negotiation.
The U.S. letter—one that Pascoe and I helped draft—raised an extensive array of questions and concerns. Five months later, a letter came back from Chinese officials specifying that Xinhua would receive no fees, no profit split, no details of our financial arrangements with customers, and no specifications for our software and hardware. Xinhua would have two duties: a nominal registration procedure and the ability to monitor our news. That letter became the vehicle for a negotiated agreement between the U.S. and Chinese governments, and its provisions also applied to Reuters and other non-American international information providers. We called it an “interim solution” to protect ourselves globally. We didn’t want what happened in China to set a precedent in other countries. The “interim solution” nomenclature allowed us to get on with our business. We planned to later permanently nullify the Xinhua regulations through “national treatment” language in the WTO agreement.
On October 29, 1997, nearly two years after Xinhua first proclaimed the directive, the White House announced that China and the United States had reached an agreement that allowed foreign financial news and information providers to operate in China “on acceptable terms.”
That didn’t mean, however, that Xinhua accepted those terms. I’ve since learned that after President Jiang returned from his U.S. summit meeting, a senior Xinhua official went to the Ministry of Foreign Trade and Economic Cooperation and said, “Can we go after them now?” He was bluntly told that Xinhua would abide by the terms of the agreement. Nonetheless, even today Xinhua officials insist that the exchange of letters was merely a “clarification” and it doesn’t constitute an official agreement. Reuters and Dow Jones officially registered with Xinhua in December 1997.
Xinhua is now split by internal battles between those who want to engage in more business, and purists who want to restrict the agency to its propaganda mission. FIAC, which was supposed to take over our business, now consists of a few junior clerks sitting in a cement room, watching international news scroll across a screen all day. FIAC officials summon Dow Jones and Reuters executives from time to time to criticize them for publishing news stories that Xinhua doesn’t like.
Are You “Yipping” Me?
While the thrust and parry of our negotiations played out, Xinhua learned a more modern way of doing China business from Peter Yip (whom we met earlier in this chapter), a model that is now often employed in many variations by Chinese bureaucracies in search of cash: hype and list. Once Yip realized that China Internet Corporation couldn’t control the Internet, he decided to turn CIC into an international business information service for China. But the company’s association