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Chinese News Agency IPO May Pressure Foreign Media

TAIPEI ( TheStreet) -- The world from New York to Namibia knows China aims to dominate it economically.

The country's unknown but growing military strength also worries much of Asia, and when China wants something politically in the United Nations, the other 190-plus countries listen.

But China's mass media are still an Orwellian throwback. News reports deify the Communist government and link to the Devil those who challenge it. Though pure objectivity is a myth anywhere, reporters in China outright scoff at it. We can see from protests (settled for the moment) at a newspaper in southern China last week how poorly Beijing tolerates varied viewpoints.

In another media development this month, China's uber-official Xinhua News Agency told regulators it will make an initial public offering for its Internet service, Xinhuanet.

The domestic IPO, though lacking a timeframe or other details, will let Chinese media raise money to expand their country's global influence through news stories. Orwellian or otherwise, this expansion funded by capital raised through sales of shares poses a threat to more trusted, often listed, international news media.

Xinhuanet presumably wants to raise money so it can join China Central Television, Blue Ocean Network television and (60300.SH), part of the Communist Party's People's Daily newspaper operation, in trying to be taken seriously by audiences outside the motherland.

The question isn't whether you should buy shares of Xinhuanet in Shanghai. Like a lot of state-owned firms, the parent company Xinhua is grossly fragmented, with some of its operations reported to be losing money. Your investment in Xinhua may just bankroll the fragments that don't perform.

Yet, share prices of have gone up 12% since it made an IPO in April and raised 527 million yuan ($84.75 million) in 2012. Someone has faith in its future.

Still a better question: When Xinhuanet raises money through share sales to become more dominant overseas, what happens to more trusted foreign media?

No state-run or state-monitored Chinese media organization will earn enough credibility outside China to vie for general guy-reads-his-paper-over-coffee audiences against the major U.S.-based or European-based international media. Audiences know the news is slanted to venerate China, to stick of for its offshore interests and occasionally to bash on enemies such as Japan and the United States.
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