The World Trade Organization has ruled that China's practice of funneling media imports to state-owned companies—which facilitates the country's long tradition of censorship—violates international trade laws. The ruling was a result of complaints filed by a number of US media companies, which contend that China's practices illegally restrict business opportunities.

The WTO said that China cannot limit distribution of movies, music, books, and other media to government-controlled companies. The ruling does not restrict China from reviewing materials for "objectionable content," but asserted that such restrictions were not necessary for the protection of public morals (one of the few possible exemptions a country can claim for limiting trade). China's Commerce Ministry expressed "regret" over the WTO's rulings.

The complaint was brought by the US, based on complaints from a who's who of big content: EMI, Sony Music Entertainment, McGraw Hill, Simon & Schuster, Warner Bros, Disney, Paramount, Universal, and 20th Century Fox. These companies contend that the effective limits on imports of US media represent a loss on millions of dollars in potential business.

The restriction against selling directly to Chinese consumers is also cited as the main reason there is no official Chinese iTunes Store, despite the popularity of iPods and iPhones in the country. Chinese consumers often bought from the US iTunes Store using credit cards issued by a US bank as a workaround, but China cut off access to the US iTunes Store last year because of a pro-Tibet album that was popularized during the Olympics. Access was later restored after the album was blocked for Chinese users.

The WTO has given China one year to get its act together and bring its import policies in line with international trade laws. If not, the US can ask the WTO to bring commercial sanctions against China. A similar tactic was proposed as a way to effectively break down China's infamous "Great Firewall," which routinely blocks access to Wikipedia, Twitter, blogs, and other websites. Though the current WTO ruling doesn't address access to websites and web-based services specifically, it serves as a precedent that such a complaint could prove successful.