China seen easing rules on video-sharing

China is so keen to keep foreign investment flowing that it probably will let private web sites work around strict new rules limiting video-sharing to state-controlled companies, analysts, quoted by an Associated Press report, said.

China-based web sites already need a government license that only companies majority-owned by Chinese nationals can get, and managers of private sites based in China say they already excise 'inappropriate' content, the Associated Press report said.

But the new regulations, issued December 29 and scheduled to take effect January 31, also require that the state have a controlling interest in any video entertainment web site, it added.

'It's a very clear message these Chinese film governing authorities have decided to send, that they're taking this stuff seriously and they're going to regulate it,' Jeremy Goldkorn, editor-in-chief of Danwei.org, a web site that covers Chinese media issues, was quoted by the Associated Press report, as saying.

But Goldkorn said Beijing won't shutter private video sharing web sites because that might spook foreign investors to desert the world's second-largest internet community.

Youku.com, one of China's major video sharing sites, said it had raised $40 million in American and Chinese venture capital as of November, the report said.

Overall, China's internet video sharing market is still small, but it's growing.

The Associated Press report further said Youku.com founder Victor Koo remains hopeful that he can work within the new rules.

One way to get past the new rules would be for private sites inside China to partner with TV stations or newspapers, which in China all are state-owned, said Dick Wei, a Hong Kong-based technology analyst for investment bank J.P. Morgan.

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