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Beijing giving foreign economists the cold shoulder

Foreign economists given the cold shoulder as government officials become more sceptical of research reports analysing scale of problem

PUBLISHED : Tuesday, 18 February, 2014, 8:31am
UPDATED : Wednesday, 19 February, 2014, 4:12am

Chinese government officials have quietly become more sceptical about foreign banks' research reports and are avoiding senior economists at global banks, partly because of growing mutual distrust over the scale and seriousness of the country's debt problems.

Economic researchers and people working for state-owned media told the South China Morning Post that the central government's propaganda department had instructed senior editors at major official media outlets to be cautious about whom they invite to talk about China's economy and what they might say about the problems and challenges it faces after its long run of supercharged growth.

"There's no black list or white list, but it's clear we are now being encouraged to invite economists and analysts with domestic securities firms and banks to talk about China's economy, especially on live broadcasts," said one mainland media source who declined to be named given the sensitive nature of the matter.

The mainland's fiscal position is weaker than official data shows but not significant enough to cause alarm, the International Monetary Fund said last month. The IMF warned that the mainland had become "more vulnerable to a macroeconomic shock" because of its higher debt and bigger deficit. It estimated augmented fiscal debt, which mainly refers to borrowing by local governments, had risen to about 45 per cent of the country's 51.9 trillion yuan (HK$66 trillion) gross domestic product in 2012. Many economists at foreign banks shared the IMF's concern.

There are other signs that economists at foreign banks have apparently lost favour in Beijing. For example, the China Banking Regulatory Commission used to invite some economists from foreign banks to closed-door meetings about the development of the country's banking industry, typically with a focus on its lending policy. But since last year, such meetings have been significantly reduced.

Invitations are now being sent to only a small number of economists at foreign banks whom the CBRC considers trustworthy, two China-focused economists who have a working relationship with the CBRC said.

"The general sentiment has clearly changed. The central bank and the regulators are more cautious about what they can tell you," said one of the economists.

Another said: "I think it's because the government now has more pressure on it, and some officials may even buy the conspiracy theory that some economists at foreign banks may have close ties with foreign governments so that what you tell them may quickly be passed on to those governments."

Last year, the People's Bank of China discussed internally the idea of creating the position of "PBOC chief economist" to strengthen global monetary policy research for the central bank.

The suggestion won support from PBOC governor Zhou Xiaochuan . Several chief economists at foreign and domestic banks were considered, including Ma Jun, a long-time chief China economist for Deutsche Bank.

Ma joined Deutsche Bank in 2000 after working at both the IMF and World Bank.

Ma's nomination sparked opposition within the PBOC and from other central government departments, including the Organisation Department of the Communist Party, which is in charge of all important job appointments and has the ultimate say on a candidate's political credibility, sources said.

Two e-mails sent by the Post to Ma went unanswered. The PBOC declined to comment.

"It's not a problem about Ma or someone individually but a problem about the system," one source said. "It's whether you are in the system of the Communist Party or not. If not, then you need to ask yourself why the party should trust you."

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This article is now closed to comments

YKY.yan.king.yin
I'm skeptical of this post. Why shouldn't I?
elzach
Good move, from now on, only the economists on the CRBC's payroll are allowed to talk about China's economy. China becomes such a joke sometimes. The ship is sinking....
ejmciii
The only good facts are facts manufactured by the good ole Chinese Communist Party. Gotta love the consistency of the Ministry of Propaganda.
pslhk
While copycats are preoccupied with gilding shibboleths
the learned have long adapted to the age of econ agnosticism
J Robinson called economics a national study
S Strange found military a determining economic factor
-
From Robert J. Samuelson (WP February 17):
“These are hard times for economists. Their reputations are tarnished; their favorite doctrines are damaged. Among their most prominent thinkers, there is no consensus … the situation recalls a cruel joke:
How many economists does it take to change a light bulb? None. When the one they used in graduate school goes out, they sit in the dark.”
-
and Paul Krugman (NYT September 25):
“Looking at current macroeconomic policy, the obvious question is, stupid or evil? And the obvious answer is, why do we have to choose”

Dai Muff
That's like smashing a mirror because you don't like your own reflection.
Beaker
Didn't Hitler also chose only to listen to generals who said what he wanted to hear? Others were said to be defeatist and were on the out. Things did not work out well from that policy. This policy of selecting only those who say things you want them to (I did not say "agree with them" because I believe there are those Commies in the PBOC who knows reality as well) will drive policies by those who listen to them based on wrong biases without counter balancing views. At this time where banks are borrowing new loans to pay off loans coming due because nobody wanted to admit a lot of prior loans to Commies have ended up as housing outside of China (Vancouver??). That is all the foreign economists are saying, right? Are the Chinese government saying they are wrong? Why all this talk about anti-corruption then? Can't both be correct visions of the world.
johnsonwkchoi
For the past 30 years, every year some economists from the West predicted China economy will go to hell. After crying wolf for 30 years, one has to be rather STUPID to continue to listen to them, don't you agree?
keithkklau@gmail.com
When the China government is worrying or avoiding negative comments from foreign economists, it simply tells us the foreign economists are addressing the right issue.
babyhenry
You mean printing endless amount money and getting enormous debts instead of taking the pain and biting the bullet, like Wen did, since everyone did that? We all know how great those policies work out when that 4 trillion yuan stimulus came out and how these economist mostly Keynesian were cheering. China now is in a debt problem far bigger than that during the GFC.
If anything Beijing should have acted like Zhu, and ignore these economist BS. Funny all hell was predicted when Zhu bite the bullet and took the pain while angering many of these "prestigious" idiots by going against their advice and yet instead of Hell, China was able to regain it momentum.
lucifer
I wonder if there will be more Feng shui masters taking taking their place? Official, Feng Shui masters of course.

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