Photo courtesy of Reuters/Navesh Chitrakar

By Koh Gui Qing and John Shiffman

BEIJING/WASHINGTON (Reuters) – In August, foreign ministers from 10 nations blasted China for building artificial islands in the disputed South China Sea. As media around the world covered the diplomatic clash, a radio station that serves the most powerful city in America had a distinctive take on the news.

Located outside Washington, D.C., WCRW radio made no mention of China’s provocative island project. Instead, an analyst explained that tensions in the region were due to unnamed “external forces” trying “to insert themselves into this part of the world using false claims.”

Behind WCRW’s coverage is a fact that’s never broadcast: The Chinese government controls much of what airs on the station, which can be heard on Capitol Hill and at the White House.

WCRW is just one of a growing number of stations across the world through which Beijing is broadcasting China-friendly news and programming.

A Reuters investigation spanning four continents has identified at least 33 radio stations in 14 countries that are part of a global radio web structured in a way that obscures its majority shareholder: state-run China Radio International, or CRI.

Many of these stations primarily broadcast content created or supplied by CRI or by media companies it controls in the United States, Australia and Europe. Three Chinese expatriate businessmen, who are CRI’s local partners, run the companies and in some cases own a stake in the stations. The network reaches from Finland to Nepal to Australia, and from Philadelphia to San Francisco.

At WCRW, Beijing holds a direct financial interest in the Washington station’s broadcasts. Corporate records in the United States and China show a Beijing-based subsidiary of the Chinese state-owned radio broadcaster owns 60 percent of an American company that leases almost all of the station’s airtime.

China has a number of state-run media properties, such as the Xinhua news agency, that are well-known around the world. But American officials charged with monitoring foreign media ownership and propaganda said they were unaware of the Chinese-controlled radio operation inside the United States until contacted by Reuters. A half-dozen former senior U.S. officials said federal authorities should investigate whether the arrangement violates laws governing foreign media and agents in the United States.

“SERIOUS INQUIRY”

A U.S. law enforced by the Federal Communications Commission (FCC) prohibits foreign governments or their representatives from holding a radio license for a U.S. broadcast station. Under the Communications Act, foreign individuals, governments and corporations are permitted to hold up to 20 percent ownership directly in a station and up to 25 percent in the U.S. parent corporation of a station.

CRI itself doesn’t hold ownership stakes in U.S. stations, but it does have a majority share via a subsidiary in the company that leases WCRW in Washington and a Philadelphia station with a similarly high-powered signal.

Said former FCC Chairman Reed Hundt: “If there were allegations made about de facto Chinese government ownership of radio stations, then I’m sure the FCC would investigate.”

U.S. law also requires anyone inside the United States seeking to influence American policy or public opinion on behalf of a foreign government or group to register with the Department of Justice. Public records show that CRI’s U.S. Chinese-American business partner and his companies haven’t registered as foreign agents under the law, called the Foreign Agents Registration Act, or FARA.

“I would make a serious inquiry under FARA into a company rebroadcasting Chinese government propaganda inside the United States without revealing that it is acting on behalf of, or it’s owned or controlled by China,” said D.E. “Ed” Wilson Jr., a former senior White House and Treasury Department official.

CRI headquarters in Beijing and the Chinese embassy in Washington declined to make officials available for interviews or to comment on the findings of this article.

Justice Department national security spokesman Marc Raimondi and FCC spokesman Neil Grace declined to comment.

Other officials at the FCC said the agency receives so many license applications that it only launches a probe if it receives a complaint. People familiar with the matter said no such complaint has been lodged with the FCC about the CRI-backed network in the United States.

BUILDING “SOFT POWER”

Chinese President Xi Jinping, who has chafed at a world order he sees as dominated by the United States and its allies, is aware that China struggles to project its views in the international arena.

“We should increase China’s soft power, give a good Chinese narrative and better communicate China’s message to the world,” Xi said in a policy address in November last year, according to Xinhua.

CRI head Wang Gengnian has described Beijing’s messaging effort as the “borrowed boat” strategy – using existing media outlets in foreign nations to carry Chinese propaganda.

The 33 radio stations backed by CRI broadcast in English, Chinese or local languages, offering a mix of news, music and cultural programs. Newscasts are peppered with stories highlighting China’s development, such as its space program, and its contribution to humanitarian causes, including earthquake relief in Nepal.

“We are not the evil empire that some Western media portray us to be,” said a person close to the Communist Party leadership in Beijing who is familiar with the CRI network. “Western media reports about China are too negative. We just want to improve our international image. It’s self-protection.”

In some ways, the CRI-backed radio stations fulfill a similar advocacy role to that of the U.S.-run Voice of America. But there is a fundamental difference: VOA openly publishes the fact that it receives U.S. government funding. CRI is using front companies that cloak its role.

A few of the programs broadcast in the United States cite reports from CRI, but most don’t. One program, The Beijing Hour, says it is “brought to you by China Radio International.”

Some shows are slick, others lack polish. While many segments are indistinguishable from mainstream American radio shows, some include announcers speaking English with noticeable Chinese accents.

The production values vary because the broadcasts are appealing to three distinct audiences: first-generation Chinese immigrants with limited English skills; second-generation Chinese curious about their ancestral homeland; and non-Chinese listeners whom Beijing hopes to influence.

One thing the programs have in common: They generally ignore criticism of China and steer clear of anything that casts Beijing in a negative light.

A top-of-the-hour morning newscast on Oct. 15, broadcast in Washington and other U.S. cities, was identified only as “City News.” It reported that U.S. officials were concerned about cyber attacks, including one in which the personal information of about 20 million American government workers was allegedly stolen. The broadcast left out a key element: It has been widely reported that U.S. officials believe China was behind that hack.

Last year, as thousands of protesters demanding free elections paralyzed Hong Kong for weeks, the news on CRI-backed stations in the United States presented China’s point of view. A report the day after the protests ended did not explain why residents were on the streets and carried no comments from protest leaders. The demonstrations, a report said, had “failed without the support of the people in Hong Kong.”

Many of these stations do not run ads and so do not appear to be commercially motivated.

THREE SURROGATES

Around the world, corporate records show, CRI’s surrogates use the same business structure. The three Chinese businessmen in partnership with Beijing have each created a domestic media company that is 60 percent owned by a Beijing-based group called Guoguang Century Media Consultancy. Guoguang, in turn, is wholly owned by a subsidiary of CRI, according to Chinese company filings.

The three companies span the globe:

• In Europe, GBTimes of Tampere, Finland, has an ownership stake in or provides content to at least nine stations, according to interviews and an examination of company filings.

• In Asia-Pacific, Global CAMG Media Group of Melbourne, Australia, has an ownership stake in or supplies programming to at least eight stations, according to corporate records.

• And in North America, G&E Studio Inc, near Los Angeles, California, broadcasts content nearly full time on at least 15 U.S. stations. A station in Vancouver also broadcasts G&E content. In addition to distributing CRI programming, G&E produces and distributes original Beijing-friendly shows from its California studios.

In a Sept. 16 interview at his offices near Los Angeles, G&E president and CEO James Su confirmed that CRI subsidiary Guoguang Century Media holds a majority stake in his company and that he has a contract with the Chinese broadcaster. He said that a non-disclosure agreement bars him from divulging details.

Su said he complies with U.S. laws. G&E doesn’t own stations, but rather leases the airtime on them. “It’s like a management company that manages a condominium,” he said.

Su added that he is a businessman, not an agent for China. “Our U.S. audience and our U.S. public has the choice,” Su said. “They can choose to listen or not listen. I think this is an American value.”

GBTimes CEO Zhao Yinong, who spearheads the European arm of the expatriate radio operation, confirmed that he receives several million euros a year from CRI. In an interview in Beijing, Zhao said he was “not interested in creating a false China” and he had “nothing to hide.”

Tommy Jiang, the head of CAMG, the Australian-based company that owns and operates stations in the Asia-Pacific region, declined to comment.

BORN IN A CAVE

CRI has grown remarkably since its founding in 1941. According to its English-language website, its first broadcast was aired from a cave, and the news reader had to frighten away wolves with a flashlight. Today, CRI says it broadcasts worldwide in more than 60 languages and Chinese dialects.

CRI content is carefully scripted, with the treatment of sensitive topics such as the banned Falun Gong spiritual group adhering strictly to the government line. Those restrictions might make China’s soft-power push an uphill battle with audiences in places like Houston, Rome or Auckland.

But CRI does have something to offer station owners. Since 2010, CRI’s broadcast partner in the United States has struck deals that bailed out struggling community radio stations, either by purchasing them outright or paying tens of thousands of dollars a month to lease virtually all their airtime. The latter is known as “time-brokering” and is the method G&E used to take to the air in Washington.

The 195-foot towers broadcasting Beijing’s agenda throughout the Washington region are located in suburban Loudoun County, Virginia, near Dulles International Airport. They pump out a 50,000-watt signal, the maximum for an AM station in the United States.

The towers went live in 2011. In the previous five decades, before the Chinese got involved, the station was known as WAGE, and it used smaller equipment and broadcast mostly local news and talk.

At just 5,000 watts, the signal didn’t carry far. This didn’t matter much until the 1990s, when Loudoun County boomed into a bedroom community for Washington. Commuters would lose the signal halfway to the capital.

In 2005, an American company called Potomac Radio LLC purchased the station and added some nationally syndicated programming. Potomac Radio president Alan Pendleton said his company had a history of leasing time to ethnic programmers, including an hour a day to CRI on another station. Revenue at WAGE continued to fall, however, and in 2009, it went off the air.

“It was a painful, painful experience,” said Pendleton. “We were losing millions of dollars a year down the drain.”

LOUDOUN COUNTY’S “LAST HOPE”

Saying they hoped to resurrect the station, other Potomac Radio executives asked Loudoun County in 2009 for permission to erect three broadcast towers on land owned by a county utility, records show. The new towers would boost the station’s signal tenfold to 50,000 watts, reaching into Washington.

In their application, Potomac Radio executives argued that the new towers offered the “last hope to retain Loudoun County’s only” radio station. The paperwork made no mention of plans to lease airtime to Su and CRI.

Potomac Radio also invoked the attacks of Sept. 11, 2001, a day when the station provided “critical information to county businesses and parents” as mobile phone service became overloaded. The new towers would contribute to public safety, proponents said.

The county Board of Supervisors approved the towers. In the days before the station came back on air in April 2011, Potomac Radio sought FCC permission to change the name to WCRW.

Asked about the initials, Pendleton confirmed that they stand for China Radio Washington. The change was his idea, not CRI’s, he said.

Loudoun County officials were surprised when the amped-up station returned as WCRW and began broadcasting G&E and CRI content about China.

“It was all very deceptive,” said Kelly Burk, a county supervisor at the time. “They presented it as all about being about local radio, and never let on what they were really up to.”

Potomac Radio’s Pendleton said there was no deception. His company was approached by CRI several months after the county approved the towers, he said.

Pendleton said he didn’t know that G&E was 60 percent owned by a subsidiary of the Chinese government until Reuters informed him. But the arrangement complies with FCC law, he said, because G&E leases the airwaves instead of owning the station.

In any event, he said, CRI is open about its goals: to present a window into Chinese culture and offer Chinese points of view on international affairs.

“If you listen to other state-sponsored broadcasters,” especially Russia’s, “they’re really insidious,” Pendleton said. “CRI’s not like that at all.”

Pendleton said he has no input in WCRW content: He simply rebroadcasts whatever programs arrive from CRI’s man in America, G&E founder James Su.

CHINA’S “PROXY”

James Yantao Su was born in Shanghai in 1970, the year China launched its first satellite. He moved to the United States in 1989, he said, ultimately settling in West Covina, a suburb of Los Angeles, and became a U.S. citizen.

By the early 2000s, Su was a moderately successful media entrepreneur. But after his 2009 deal to create G&E, in which the Chinese state-owned subsidiary has a majority stake, his fortunes rose.

Today, the 44-year-old owns or co-owns real estate and radio stations worth more than $15 million, according to a Reuters analysis of U.S. corporate, property, tax and FCC records. His projects include English and Chinese-language stations, a magazine, a newspaper, four apartment buildings, condos at the Trump International Hotel in Las Vegas, a film festival and a charity that last year donated $230,000 to an orphanage in China.

Two of his primary companies are G&E Studio and EDI Media Inc. G&E dedicated a page on its website to showcase CRI as a “close” partner, but it recently deleted the page after Reuters made inquiries. EDI’s site says it has become “China’s outward media and advertising proxy” in the United States.

In 2013, the Chinese government presented Su with a special contribution award at a media event for Chinese broadcasters.

Other ties are not as visible: The key disclosure that G&E is 60 percent owned by Guoguang Century – the Beijing firm that’s 100 percent owned by CRI – is contained in a footnote in a lengthy FCC filing made on behalf of another Su company, Golden City Broadcast, LLC.

Su declined to discuss his business career in detail. An early highlight, though, was a speech he gave in 2003, when he was in his early thirties.

Covered by China’s state-run media, the speech laid out Su’s vision for a business that could be profitable and also help China project its message in the United States. The business would need to be structured to comply with U.S. ownership laws and would “endorse China’s ideology,” Su was quoted as saying.

In the same speech, he spoke of his fellow expats’ affinity for China. “The sense of belonging to China among countrymen residing abroad and their endorsement of China’s current policies grow with each day,” Su said, according to Xinhua.

In 2008, Su gave an address in which he criticized U.S. media for focusing their China coverage on issues such as human rights.

The media were misleading “the American masses’ objective understanding of China, even engendering hostile emotions,” Su said, according to a China National Radio report.

It was in 2009 that Su’s vision really began to take shape. That year, records show, Su created G&E Studio.

“UNFILTERED REAL NEWS”

G&E now broadcasts in English and Chinese on at least 15 U.S. stations, including Salt Lake City, Atlanta, Philadelphia, Houston, Honolulu and Portland, Oregon.

The content is largely the same on each station, produced either by CRI from Beijing or by G&E from California.

A typical hour on most stations begins with a short newscast that can toggle between China news and stories about violent crimes in the United States. Besides the overtly political coverage, topics range from global currency fluctuations and Chinese trade missions to celebrity wardrobe analysis and modern parenting challenges.

While Su owns a minority share of G&E, he has structured his radio station holdings in various ways. According to the most recent FCC records, he is the majority owner of at least six stations, such as the one in Atlanta, which he purchased for $2.1 million in 2013.

In other cases he leases airtime. In Washington, for instance, he leases virtually all the time on WCRW for more than $720,000 a year through G&E. A Philadelphia station is leased under a similar arrangement for at least $600,000 a year.

A spokeswoman for Su said Reuters’ description of the extent of his network is “generally correct.”

Su declined to describe how he makes money when most of the U.S. stations air virtually no commercials. He also declined to say how he got the money to finance his radio leases and acquisitions.

His stations, Su said, offer the American public an alternative viewpoint on Chinese culture and politics. He has “no way to control” what CRI broadcasts on the stations, he said, nor is he part of any plan to spread Chinese propaganda.

“We are only telling the unfiltered real news to our audience,” he said.

On Oct. 29, WCRW carried a program called “The Hourly News.” Among the top stories: Senior Chinese and U.S. naval commanders planned to speak by video after a U.S. Navy ship passed close by China’s new artificial islands in the South China Sea.

Washington and its allies see the island-building program as a ploy to grab control of strategic sea lanes, and the Navy sail-by was meant to counter China’s territorial claims.

WCRW omitted that side of the story.

The admirals are holding the talks, the announcer said, “amid the tension the U.S. created this week.”

(Edited by Bill Tarrant and Peter Hirschberg. Reported by Koh Gui Qing in Beijing and John Shiffman in Washington and Los Angeles. Additional reporting by Benjamin Kang Lim and Joseph Campbell in Beijing, Ritsuko Ando in Tokyo, Gopal Sharma and Ross Adkin in Kathmandu, Mirwais Harooni in Kabul, Joyce Lee in Seoul, Eveline Danubrata and Arzia Tivany Wargadiredja in Jakarta, Mohammed Shihar in Colombo, Khettiya Jittapong and Pairat Temphairojana in Bangkok, Terrence Edwards in Ulan Bator, Theodora D’cruz in Singapore, Diane Chan in Hong Kong, Jane Wardell and Ian Chua in Sydney, Balazs Koranyi and Harro Ten Wolde in Frankfurt, Jussi Rosendahl in Helsinki, Sara Ledwith in London, Julia Fioretti in Brussels, Can Sezer in Istanbul, Andrius Sytas in Vilnius, Kole Casule in Skopje, Renee Maltezou in Athens, Margarita Antidze in Tbilisi, Radu-Sorin Marinas in Bucharest, Geert De Clercq in Paris, Marton Dunai in Budapest, Ed Cropley in Johannesburg, Selam Gebrekidan in New York, Anna Driver in Houston, Renee Dudley in Boston, Brian Grow in Atlanta, David Storey in Washington and Euan Rocha in Toronto.)