Quotable: Gordon Crovitz on censorship and China’s stock market

publicdiplomacycouncil.org

Wednesday, January 13th 2016

wsj.com

“There is a connection between Beijing’s repression and last week’s market shocks,” is the subhead of an article by L. Gordon Crovitz, “China Disappears Information,” in The Wall Street Journal of January 10, 2016.  The article will interest all Public Diplomacy people as they continue to advocate the free flow of information.

Writing that China is “in an authoritarian country where providing information is a crime,” Crovitz opened the article with the closure of Causeway Bay Books in Hong Kong after “five owners and employees were ‘disappeared’ — apparently snatched and detained by mainland security forces — for selling books that offend Beijing.”  In Beijing, Caijingmagazine’s financial journalist Wang Xiaolu was arrested.  Crovitz traced the connections between the downturn of the Chinese stock market and the Communist Party’s censorship.  Here are a few key points:

• International investors have long trusted Hong Kong as a haven for information about China. The Communist Party has always censored political speech in China, but until recently the Politburo understood that being part of global markets requires an open flow of information. Beijing’s censorship now suppresses economics as well as politics.

• Publishing private information about markets is central to financial journalism. Mr. Wang’s reporting about government plans was accurate, which was no defense. Instead, Beijing used his case to instruct other journalists it is now a crime to report accurate information about markets.

• The Chinese propaganda ministry issued a directive: “Do not use emotionally charged words such as ‘slump,’ ‘spike’ or ‘collapse,’ ” it instructed. “Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market.”

• The result is that global investors are in the dark, and China’s 90 million individual shareholders even more so. When mainland censors blocked Web searches for “stock market crash,” Chinese investors who incurred losses resorted to black humor on social media. “Last month, my dog ate what I ate,” one wrote. “Last week, I ate what my dog ate. This week, I ate my dog.”

• Global finance depends on a free flow of information. World markets are in uncharted territory now that the world’s second-largest economy is censoring within and beyond its borders. The lesson from China is that markets can’t function smoothly when accurate information is disappeared.

Author: Donald M. Bishop