China said it is laying the groundwork for an appeal of last week's World Trade Organization ruling that could help to force open the country's market for U.S. movies, music and books.
"We are preparing the necessary documents and are not ruling out the possibility of an appeal," Yao Jian, spokesman for China's Ministry of Commerce, said Monday.
According to WTO rules, China will have 60 days from the Aug. 12 ruling from a panel of judges to appeal or it will be adopted by the WTO's dispute settlement body.
"We think it was improper for the expert panel not to reject the U.S. request," Mr. Yao said.
He defended China's measures to protect its market for cultural products, including movies, saying that the country needs to protect its local industry as "our competitiveness is still pretty weak."
The WTO ruling ordered Beijing to stop forcing U.S. owners of copyright material to use government-controlled distribution companies and allow foreign companies to sell music on the Internet.
If upheld and implemented, it could benefit international film studios, which are currently forced to distribute new films through the state-owned China Film Group Corp. It could also help Apple Inc., which could launch an iTunes store in China.
Even if it stands, the ruling still leaves much to be desired, some experts said. For instance, it does little to stop piracy, the industries' biggest problem in China.
It "may clear away some of the obstacles U.S. companies have faced in China, but does not do much to address most of the fundamental causes of copyright piracy there," says Eric Priest, an assistant professor at the University of Oregon School of Law who researches copyrights and the Chinese entertainment industry.
A ceiling on the number of new foreign films allowed into China each year is another barrier the ruling doesn't fix. The number of newly released films that can be imported to China for shared revenue would continue to be capped at 20. China Film Group chooses the 20 titles after screening thousands of options.
According to China Film Group's annual report released in February, China box-office sales last year were 4.34 billion yuan ($635 million), 39% of which was divided among foreign films.
The remainder of China's box-office sales went to Chinese films, the report said, acknowledging that restrictions helped to bolster the domestic industry.
Mr. Priest said part of the problem is that there is little incentive for China to open its entertainment industry.
