SHANGHAI — China plans to spend billions of dollars over the next few years to develop media and entertainment companies that it hopes can compete with global giants like the News Corp and Time Warner, and will in the process loosen some of its tight control of these industries.

An ambitious plan, set forth in guidelines last week by China’s State Council, envisions the creation of entertainment, news and culture companies with a market orientation and with less government backing. China, in short, would like to consolidate its industry into companies resembling Bloomberg, Time Warner and Viacom, analysts say.

Beijing hopes the moves will even improve the nation’s image overseas — part of a longstanding effort to use “soft power”, to win friends abroad.

Along the way, Beijing will allow private and foreign companies to invest in everything from music, film and television to theatre, dance and opera productions — though largely through state-owned companies.

Western media giants have for years been frustrated by their inability to win approval to produce films and television programmes aimed at Chinese consumers; often, they have operated with Chinese joint venture partners and run into delays or political barriers. Several American companies said they were studying the new Chinese rules and declined to comment further on them.

However, one exception is likely to be news programming, which falls under the control of the Communist Party. China has also been upgrading its state-run news media, with an eye on foreign language publications, wire services and television programmes to reach readers and viewers overseas.

Among the first companies to benefit from the new government policy will be Shanghai Media Group (SMG) one of the country’s biggest state-run news and media conglomerates. In August, the government gave the company approval to reorganise its operations and to issue stock to the public.

SMG had close to US$1 billion ($1.4 billion) in revenue and US$100 million in profit last year. It also has partnerships with companies like the News Corp, Viacom and CNBC. To help the company bulk up, the China Development Bank recently agreed to provide US$1.5 billion in financing over the next five years.

The bank will become a partner with SMG on a separate US$735 million private equity fund. That fund, China Media Capital, will invest in media and entertainment properties.

Mr Michael Tung, the chief investment officer of China Media Capital, says the government is encouraging consolidation in the media and entertainment industry and that the fund will help develop bigger media groups.

“China’s market is very fragmented,” Mr Tung said. “China should have four or five huge media groups. There’s nothing now like News Corp or Time Warner. But we’ll also be looking for overseas opportunities.”

Foreign media companies looking for greater access to China’s vast market may be disappointed, analysts say of the new guidelines.

“This is not an invitation for stakes by international media companies,” says Mr Vivek Couto, director of Media Partners Asia, a Hong Kong-based research firm. “But this may be an invitation for private equity and foreign capital to do more.”