The irony is that the dominant Western narrative on China has it that market-oriented development would inevitably lead to liberalization, including, presumably, for the news media. This narrative’s assumptions look increasingly flawed, however. Instead, the Chinese authorities are working out a recipe for CCP media values—“watch what you can watch, and don’t watch what you cannot watch” as a Chinese foreign ministry spokesperson recently explained—to trump genuine market values of open competition, transparency, and rule of law.

Even more impressive is that the “market-based censorship” model has been achieved in the context of a rapidly changing media environment; the CCP is successfully adapting controls from old media to new, including the internet.

For traditional media, market-based censorship intersects nicely with the CCP’s commercialization of the industry. Now, when a publication or editor pushes the limits of permissible coverage, he must not only consider the professional (and personal) risk of being demoted, fired—or sometimes worse; added to the mix is the financial danger of displeasing advertisers or having the publication shut down under pressure from powerful business interests with close official ties.

The three-month suspension at the end of 2008 of Caijing Shibao—a business publication known for its relatively daring investigative journalism—is emblematic of this economically based incentive structure. In July 2008, the newspaper ran a story examining millions of dollars worth of suspicious cash transfers at a branch of the state-run Agricultural Bank of China. The report was quickly deemed by officials to have violated several media regulations and eventually led to the publication being temporarily shut down for “internal reorganization.”

The suspension of Caijing’s operations led to the dismissal of 70 staff and sent a clear message to other would-be, independent-minded news enterprises: push editorial limits at your economic peril.

For new media, the authorities have also been quick to put in place market-based strategies for suppressing news and information of political consequence. A recently released Freedom House study of internet freedom found that unlike some developing countries that enable significantly more freedom on the internet relative to traditional media, China has been at the vanguard of digital media suppression, earning it a “Not Free” rating.

In addition to employing “low-tech” means of repression, such as some of the world’s longest prison terms for “cyberdissidents,” the Chinese authorities have been at the forefront of a growing trend toward “outsourcing” censorship and monitoring tasks to private companies. As scholar Rebecca MacKinnon notes, “the process of web site censorship by which domestically hosted content [in China] is deleted completely or prevented from being published in the first place … is carried out almost entirely by Internet company employees, not by ‘Internet police’ or other government officials.”

Such aims are achieved via a sophisticated system that includes lists of taboo topics issued to private enterprises by government bodies like the Information Office of Beijing. If internet service providers (ISPs) or websites fail to comply with authorities’ orders, they are subjected to fines, have their servers confiscated by police, and can have their businesses licenses revoked by the authorities.

In this pseudo-commercial environment a news company’s success or failure rests on its ability to meet government censorship demands, rather than on the quality of its products or services. In the current economic climate, the vulnerability of private enterprises is likely to grow. As their profit margins shrink, so too does their ability to withstand political pressure.

It is disturbing that such a creeping commercialization of censorship is taking hold in China, home to the world’s largest population of Internet users in the world—300 million and counting. More ominously, Beijing’s controlling approach to media, particularly of the internet, appears to be gaining traction beyond China’s borders. In December 2008, Vietnam’s government issued regulations holding ISPs responsible for ensuring that blogs they host do not include content deemed “undesirable.” Cambodia’s Ministry of Information is reportedly preparing a law that would extend traditional media controls to audio-visual online content, a regulatory path similar to that of its counterpart further up the Mekong. China is already believed to share censorship technology and know-how with a number of governments in the region.

At a time when the democratic idea is being directly challenged in Asia, the “first freedom” represents a critical proxy in a larger values battle. Should the CCP gambit succeed, it would be gravely detrimental to the interests of the Chinese people. But to the extent the values of CCP-managed media set the standard for emerging media markets elsewhere in Asia, the stakes become considerably higher.

Christopher Walker is director of studies and Sarah Cook is an Asia researcher at Freedom House. The organization’s annual global survey of press freedom was released on May 1, in advance of World Press Freedom Day on May 3.