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Tuesday, September 26, 2023

China’s economists under gag orders against airing worsening bad news

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(TibetanReview.net, Aug06’23) – Communist Chinese leaders have long used censorship to hide their excesses as well as shortcomings and incompetence to keep the citizenry in the dark about what has really been going on in the country. When the promised quick recovery from a long, draconian Covid lockdown failed to materialise after more than half a year of lifting the restrictions, Chinese authorities are putting pressure on prominent local economists to avoid discussing negative trends such as deflation, as concerns mount about Beijing’s ability to boost a flagging recovery in the world’s second-biggest economy, said a Financial Times report posted on the afr.com Aug 6.

The report cited multiple local brokerage analysts and researchers at leading universities as well as state-run think-tanks as saying they had been instructed by regulators, their employers and even domestic media outlets to avoid speaking negatively about topics ranging from fears of capital flight to softening prices.

Seven well-regarded economists have told the Financial Times that their employers had told them some topics were off-limits for public discussion. The China Securities and Regulatory Commission, the stock regulator, was stated to have accused brokerage analysts of playing up risks facing the economy, “which is suffering from weak consumer demand, declining exports and an ailing property sector.”

Two think-tank scholars and two brokerage economists, all of whom serve as government advisers, have said there was pressure to present economic news positively to increase public confidence.

“The regulator doesn’t want to hear negative comments about the economy in public,” an adviser to the central bank has said. “They wanted us to interpret bad news from a positive light.”

The report cited analysts as saying growing self-censorship among economic research professionals, on whom investors often rely in a market where reliable data is difficult to come by, underscored Beijing’s efforts to control the flow of information.

“You’ve got an economic slowdown that would worry any country, coupled with a China that always likes to put on a brave face to the world and a leadership that is particularly image-conscious,” Andrew Collier, managing director of Orient Capital Research in Hong Kong, has said. “Put those three factors together and it’s the recipe for a very non-transparent economy.”

The clampdown on economic commentary was stated to have followed a drumbeat of disappointing data that undermined investor confidence and hindered Beijing’s efforts to spur a robust post-Covid rebound.

Gross domestic product expanded just 0.8% in the second quarter against the previous three months. Last month and the Communist party’s politburo admitted the recovery was making “tortuous progress”, the report noted.

China’s producer price index has declined for eight straight months since October, while annual consumer inflation hit a two-year low of zero growth in June. Citigroup economists have said core goods prices, which strip out volatile food and energy costs, had already entered a “deflationary zone” thanks to weak consumer demand.

Yet senior officials from the country’s official statistics bureau and the central bank have ruled out the possibility of deflation. “Deflation does not and will not exist in China,” Fu Linghui, a National Bureau of Statistics spokesperson, had said last month.

The report cited one Shanghai-based economist at a major financial institution as saying local television networks had made it clear that only positive comments would be tolerated. Comments about deflation or other economic risks “won’t appear on TV at all, even if I make them in pre-recorded interviews,” the economist has said.

The pressure was reported to have prompted many economists to refrain from sensitive topics or to resort to euphemisms such as “subdued inflation” in research reports and on investor calls.

But despite resorting to euphemisms and refraining from sensitive topics, in private, many economists, even those firmly within the establishment, have continued to question the party line, the report said.

In fact, shortly after Beijing released second-quarter economic growth figures, Fan Jianping, former chief economist of the State Information Centre, a top government think-tank, said in a closed-door conference that he did not trust the official statistics and warned that China was heading towards deflation, the report said, citing two attendees.


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