Receive free updates on the Chinese economy
We’ll send you a myFT Daily Digest email every morning with the latest business news from China.
Chinese authorities are pressuring prominent local economists to avoid discussing negative trends such as deflation as concerns mount over Beijing’s ability to boost a flagging recovery in the world’s second-largest economy.
Several local brokerage analysts and researchers at top universities and government think tanks said they have been ordered by regulators, their employers and even domestic media not to speak negatively on issues ranging from fears of capital flight to falling prices.
Seven respected economists told the Financial Times their employers had told them some topics were off-limits to public discussion. The China Securities and Regulatory Commission has accused broker analysts of upplaying risks to an economy plagued by weak consumer demand, slowing exports and a struggling real estate sector.
Two think-tank academics and two brokerage economists, all of whom serve as government advisers, said there is pressure to present economic news in a positive light to boost public confidence. “The regulator doesn’t want to hear negative comments about the economy from the public,” said a central bank adviser. “They wanted us to take bad news in a positive light.”
Analysts said increasing self-censorship among economic researchers, which investors often rely on in a market where reliable data is difficult to come by, underscores Beijing’s efforts to control the flow of information.
“There is an economic downturn that would worry any country, coupled with a China that always shows a brave face to the world and a leadership that is particularly image-conscious,” said Andrew Collier, chief executive of Orient Capital Research in Hong Kong. “If you put these three factors together, you have the recipe for a very non-transparent economy.”
The crackdown on economic comment follows a spate of disappointing data that has eroded investor confidence and hampered Beijing’s efforts to build a robust post-COVID recovery. In the second quarter, gross domestic product grew by just 0.8 percent compared to the previous three months. Last month, the Communist Party’s Politburo admitted that the recovery was making “sluggish progress”.
But while Beijing is attempting to restore faith with limited stimulus measures, certain issues, such as deflation, are taboo.
China’s producer price index has fallen for eight consecutive months since October, while annual consumer inflation hit a two-year low of zero growth in June. Economists at Citigroup said core commodity prices, which exclude fluctuating food and energy costs, have already entered a “deflationary zone” due to weak consumer demand.
But senior officials at the country’s official statistics office and central bank have ruled out the possibility of deflation. “There is no deflation in China and there won’t be,” Fu Linghui, a spokesman for the National Bureau of Statistics, said last month.
A Shanghai-based economist at a major financial institution said local TV stations made it clear that only positive comments would be tolerated. “It wasn’t a problem last year to talk about deflation or other economic risks,” said the economist. “Now comments like that won’t appear on TV at all, even if I make them in taped interviews.”
Some analysts said Beijing is trying to tighten scrutiny over negative comments to boost confidence, which is crucial to spurring a recovery but is in short supply. “Confidence plays a bigger role than government stimulus in bailing out China’s economy,” said Dan Wang, chief economist at Hang Seng Bank China.
The Shenzhen Securities Regulatory Bureau issued a warning letter to China Merchants Securities, a Shenzhen-based brokerage firm, in June, accusing it of failing in a February report that predicted that China’s stock market would lose momentum in the coming years to have to conduct a “rigorous analysis”. citing cyclical patterns.
The pressure has prompted many economists to steer clear of sensitive issues or resort to euphemisms like “subdued inflation” in research reports and investor pitches.
Recommended
“As the whole market knows, there is no deflation in China,” a prominent economist replied to a question about deflation risks at a closed conference in Beijing. “However, we could speak of low inflation [risks]they added, urging the audience to be careful in choosing which part of his speech to report.
“It will be bad if you don’t see me tomorrow,” said the economist.
But privately, many economists, even those firmly in the establishment, continue to question the party line.
Shortly after Beijing released its second-quarter economic growth numbers, Fan Jianping, a former chief economist at the State Information Center, a top government think tank, said in a closed conference that he didn’t trust the official statistics and warned that China was doing it, according to Two participants, the economy is headed for deflation. The fan didn’t respond to a request for comment.
“We were a bit shocked,” said one person. “But he said it out loud.”
Comments are closed.