China suffered a setback at a WTO consultation process on Wednesday, when a three-member panel ruled in favor of the US, which had lodged a complaint related to China’s import restrictions on reading material, films, DVDs and sound recordings. The panel found the restrictions violated China’s WTO commitments.

The verdict was cheered as a victory by the US entertainment industry, which said the WTO panel report would pave the way for fair competition by US creative industries in the Chinese market.

If implemented, the verdict could ensure Hollywood blockbusters, books and music, and the foreign companies that import and distribute these entertainment products, have a fair share of China’s lucrative entertainment market.

The report rings an alarm bell for the Chinese entertainment and cultural industry, which lags too far behind its foreign competitors in market success and filling cultural demand.

Eight years after China joined the WTO, its cultural products market remains one of the most well-guarded, monopolized sectors of the country.

This may be a necessary step for protecting local culture, but in the long run, achieving that goal will be hard. The verdict came as a reminder that opening-up is a must.

When China entered the WTO, it secured a certain time period to protect the industries it deemed key to the core national interests, including cultural and entertainment products. In addition to the worry that foreign products would dominate the market, the government also feared that national culture would be washed away by foreign culture.

It’s a fair consideration. In recent years, the invasion of Hollywood movies and US pop culture have raised concerns among governments from Europe to the Middle East, which have set different barriers to restrict the free inflow of US entertainment products.

The Chinese government is no exception. But while it has gradually opened the cultural market, the buffer time, designed for domestic companies to become better prepared to take on foreign rivals, doesn’t seem to have fostered enough competition within the domestic market.

The thriving pirated DVD business shows that the huge public demand is poorly fed. The pirated-entertainment business stifles the originality crucial for cultural creativity.

The Chinese government has signaled that it might appeal the WTO’s ruling and the future development of the case remains to be seen.

But it is clear that the government cannot keep domestic cultural companies from full competition by blocking foreign players. Vitality comes only from competition.