BEIJING/SHANGHAI (Reuters) - China’s latest maneuvre in a sweeping crackdown on internet content has sent a chill through a diverse community of filmmakers, bloggers, media and educators who fear their sites could be shut down as Beijing tightens control.

Over the last month, Chinese regulators have closed celebrity gossip websites, restricted what video people can post and suspended online streaming, all on grounds of inappropriate content.

On Friday, an industry association circulated new regulations that at least two “auditors” will, with immediate effect, be required to check all audiovisual content posted online - from films to “micro” movies, documentaries, sports, educational material and animation - to ensure they adhere to “core socialist values”.

Topics deemed inappropriate include drug addiction and homosexuality, said the government-affiliated China Netcasting Services Association, which represents more than 600 members.

People flocked online at the weekend to criticize the move, with most saying it was a step backwards that would hamper creativity. Some noted it could be near impossible to enforce.

“According to these censorship rules, nothing will make it through, which will do away with audiovisual artistic creation,” Li Yinhe, an academic who studies sexuality at the government-run Chinese Academy of Social Sciences, wrote in an online post.

Under the government rules, such works as Georges Bizet’s opera “Carmen” and Shakespeare’s “Othello” would technically have to be banned for depicting prostitution and overt displays of affection, she said.

The rules, which affect social media giants like Weibo Corp WB.O as well as small platforms that have thrived in China's buzzing creative online space, are the latest step toughening oversight ahead of the Communist Party Congress later this year, when President Xi Jinping is expected to consolidate power.

China’s online video market, including revenue from advertising and content purchases, had been expected to more than quadruple to around 96.2 billion yuan ($17.6 billion) by 2020 from 2015, according to 2016 data from IHS Markit.

“We used to describe the constant drip of regulation as boiling a frog in warm water. Now it is outright scalding with boiling water,” Wang Xiaoxiao, a talent agent who represents several actors who have gained fame online, told Reuters.

Zhao Jing, the founder of Yummy, a site that specializes in education on gender topics, said she would be using euphemisms for genitalia and avoid banned topics such as one-night stands and extramarital affairs to get around keywords that will trigger the censors.

FILE PHOTO - People use computers at an internet cafe in Hefei, Anhui province, September 15, 2011. REUTERS/Stringer

She fears her site could be thrown off Tencent’s WeChat instant messaging application otherwise.

ENTERTAINMENT IN FOCUS

While censorship of creative content in China is nothing new, the internet has generally been a more permissive arena because of the gray areas around regulation.

The atmosphere has become more tense since Xi called for stricter regulation last year.

In June, China's cyberspace authorities ordered internet firms like Baidu Inc BIDU.O and Tencent Holding Ltd 0700.HK to close 60 popular celebrity gossip social media accounts, including "China's Number One Paparazzi" Zhuo Wei, an account that had more than 7 million followers.

The government said it aimed to “create a healthy and uplifting mainstream media environment, and actively spread socialist core values.”

This focus on online entertainment content - an extension of the government’s well-established control over politics and news - is aimed at a largely younger audience, said Qiao Mu, a Beijing-based media scholar known for criticizing censorship.

“This is a return to ideology,” Qiao said in a phone interview. “To the Party, entertainment will make people lose their revolutionary spirit.”

One of the main focuses of online scorn was the inclusion of homosexuality on the list of banned topics, underlining a long-standing conservative attitude in China towards same-sex relations despite often thriving gay scenes in major cities.

Two filmmakers interviewed by Reuters said the latest ruling closed one of the remaining channels for uninhibited creative works. Films shown in cinemas or on television already go through thorough censorship processes before being given the go-ahead.

“Many filmmakers know they could never get their film approved for cinemas, and so put them online,” said Fan Popo, a gay activist and film director.

The only hope for such filmmakers left was that censors would struggle to implement the new rules, he said.

The crackdown is also being felt in the country’s top internet firms.

Shares in Weibo Corp, the operator of China’s top microblogging site, are down around 10 percent since restrictions were imposed on its audiovisual content in mid-June.

The company said last week it would work closely with state media to promote “mainstream” ideas.

For some platforms, investors have pulled funding and advertisers have jumped ship because of the uncertainties, industry insiders told Reuters.

Dushe Dianying, or “poison tongue movie”, a popular movie-review site known for its acerbic critiques, had its account on WeChat shut down last month by regulators citing “socialist values”.

The site, backed by German media group Bertelsmann, was valued at 300 million yuan ($44.17 million) last year.

A person familiar with the site’s operations said some of its business tie-ups and advertising deals had been hit. Others in the industry also said investment had suffered.

“It is now just too risky,” said the person, who asked not to be named as they were not authorized to speak to the media. ($1 = 6.7919 Chinese yuan renminbi)