China is not squeamish about putting a price and index on its culture. In a quirky development last month, China launched its first cultural industry index at the Shenzhen Stock Exchange.

The Exchange, along with Shenzhen Securities Information Co, jointly issued the OCT Culture Index, with its basis set at 1000 points. Of the 99 listed cultural companies in the Mainland, 50 were chosen as ‘sample companies’ for the index. The OCT Index, which as of now hasn’t generated much notice, does signal a shifting trend - China’s determination to change its growth model.

In the 12th Five Year Plan, ‘culture’ was designated as a new ‘pillar industry’ and the sector is expected to account for more than 5 per cent of its gross domestic product by 2015. Enterprises providing culture-related services grew rapidly in 2011 and contributed 3 per cent to the overall economy. According to the National Bureau of Statistics, which has been tracking the sector closely, added value generated by those providing cultural and entertainment goods and services surged 21.96 per cent year on year to hit RMB 1.35 trillion in 2011.

Controlled promotion

Culture investors are looking at three trends in this now robust sector - traditional media, new media and entertainment industries such as film production companies and publishing houses. The cultural ministry has formulated a series of preferential policies over the past half decade to accelerate the growth of the cultural and creative sectors. The finance ministry too has decided to spend most of its annual budget for the culture industry on encouraging mergers and acquisitions, innovations and investment in overseas markets. These overseas activities, however, will be led by State-owned enterprises directly under the central government.

Since 2006, China has been at pains to change its reputation as a creator of only ‘propaganda material’. It has actually let go of government-funded cultural institutions and turning them into private enterprises. Tourists to China are invariably treated to flamboyant acrobatic shows, housed in aging opera houses from the Mao era. Over the years, more than 580 publishing houses, 3,000 bookstores, 850 movie producers and distributors, 57 public TV series producers and the marketing sectors of 38 Communist Party of China newspapers and journals have been restructured and turned into enterprises. Another 3,271 non-political newspapers and journals funded by the government have gone private as well.

Mergers, acquisitions and public listings in the sector have gone up and the export volume of China’s core cultural products jumped from USD 3.08 billion in 2001 to USD 18.68 billion in 2011.

Big boys

The control scenario may be more demand-driven in future with some big boys backing this industry. Industrial and Commercial Bank of China, the country’s largest banker, has increased financial support. By the end of September, the lender extended RMB 90 billion in loans to the country’s cultural industry. This is up 36.32 per cent from the end of last year. The bank plans to issue at least 20 billion yuan in loans to the industry each year over the coming years.

Not just banks, but fund houses too are seeing big prospects. The China Culture Industry Investment Fund has plans to plough in more than RMB 1 billion into cultural and media enterprises until the end of year. The fund has so far invested in five leading cultural companies including Xinhuanet, the online portal of the official news agency Xinhua, and the state-owned publishing house China Publishing Group. The rapid expansion of this Fund indicates that cultural industries, such as film production houses and media outlets, too have become engines for economic growth in China.

‘Real economy’

Chinese lawmakers, however, have always placed greater faith in the ‘real economy’, than in stock movements, which why ‘culture’ too is being addressed in concrete ways. One strategy is to build innovative industrial parks to counter sluggish overseas demand and rising costs at home. The Beijing Marco Polo Cultural and Creative Industrial Park, which is being launched by the end of the year, is one such innovation which brings research, innovation in arts and crafts to export and finance options under one massive roof. Investments from Hong Kong too are on the rise, with projects ranging from TV copyright trade and construction of cultural parks.

The next generation of development of the services sector has started in China, with the ‘culture index’ at Shenzhen stock exchange playing a small part.

The writer is a freelance journalist based in China.