Feb. 15 (Bloomberg) -- China's government shut down 76 Web sites for providing downloads of Hollywood movies, music and other illegal content, responding to pressure from the U.S. and Europe for enhanced protection of intellectual property.

Authorities arrested 18 people and fined 29 Web site operators a combined 789,000 yuan ($98,046) in the fourth quarter in the government's first major campaign against online piracy, Yan Xiaohong, deputy commissioner of the National Copyright Administration, said at a briefing in Beijing today.

The U.S. movie, publishing, software and recording industries say illegal reproduction of their goods in China caused losses of $2.4 billion last year. The Bush administration is considering complaining to the World Trade Organization, U.S. Trade Representative Rob Portman said yesterday.

``We need to wait and see if the government is just taking a surgical one-time action or if it is serious in addressing this problem,'' said Albert Louie, managing partner of Beijing-based A. Louie Associates, which helps international companies track down counterfeiters and online pirates in China. ``The government must crack down more consistently.''

About 90 percent of software used in China is pirated, according to researcher IDC and the Business Software Alliance, a trade group funded by Microsoft Corp. DVD copies of Hollywood movies sell openly on the streets of Beijing and Shanghai for as little as $1 apiece. Chinese companies also copy products from Procter & Gamble Co. shampoo to Pfizer Inc. drugs.

Tracking Software

The crackdown demonstrated the government's ``serious attitude'' toward Internet piracy, the copyright administration's Yan said. Authorities also ordered 137 Web sites to remove illegal content, which included reports from newspapers and magazines that were posted without permission.

``This campaign was effective in beginning to address some Internet piracy problems in China,'' Yan said. ``But I must say online piracy isn't only a problem in China, it is a problem even in developed nations.''

China is developing a search engine to track online pirates who offer illegal music downloads, which will be one of the government's ``key tools,'' Yan said.

The State Council, China's cabinet, soon will issue a new national law governing copyright, patents and online protection of intellectual property, Wang Ziqiang, a director general at the administration, said at the briefing. China also plans to become a signatory to two international treaties governing copyright and musical performances and recordings, he said.

Hollywood Movies

Beijing On-line Jiuzhou Information Technical Service Co. was fined 90,000 yuan for providing downloads of Hollywood movies including ``The Pacifier'' on its Web site, www.116.com, during the fourth-quarter crackdown. The action was the result of a complaint by the Motion Picture Association of America, according to a statement distributed at the briefing.

U.S. Trade Representative Portman yesterday unveiled a report on U.S. trade policy toward China that promises tougher enforcement of trade rules, part of an attempt to head off legislation in Congress to impose tariffs on imports of Chinese goods. The U.S. trade deficit with China reached a record $202 billion last year, according to U.S. Commerce Department data.

China needs to ``invest more in better training for its enforcement staff, and more importantly educate the public so that people know that violating intellectual property rights is wrong,'' Beijing-based consultant Louie said.

To contact the reporter on this story: Allen T. Cheng in Beijing at Acheng13@bloomberg.net.

Last Updated: February 15, 2006 01:37 EST