Beijing should be more forthcoming with information
Volatility in world financial markets reflects uncertainty about China's economic growth prospects. The recent slump in mainland shares is not the only contributing factor. Official attempts to prop up falling markets have proved part of the problem, not the solution. Failure to share information in a timely manner has only fuelled rumour and speculation. It is not confined to meddling in markets. The industrial explosions in Tianjin last month that killed scores of people provided another example.
This week, Xinhua reported that the authorities had punished nearly 200 people for spreading rumours both about the stock market and the explosions. There is room here for self-reflection by officials. In the case of the explosions, they did convene daily press conferences, but it remained unclear in the critical hours and days afterwards who was in charge of a disaster that made international headlines for days. Two weeks later it emerged that the top party leadership was furious over attempts by Tianjin authorities to underplay the death toll.
The people arrested for allegedly spreading rumours about the stock-market turmoil include reporter Wang Xiaolu from leading business magazine Caijing. Mainland state television has shown a video of Wang confessing to causing "panic and disorder" in the stock market by writing a news story based on market rumours before share prices began to fall. Reporting on rumours of material interest to the public to sort fact from fiction is what reporters are supposed to do. A void of official information only provides fertile ground for rumour.
An egregious example is to be found in circumstances surrounding the yuan devaluation. The authorities tried to dispel fears it would spark a currency war, with a Xinhua commentary saying it was aimed to "better reflect market development in the exchange rate". But such were the repercussions that days later officials came out to amplify the decision. It was two weeks before Premier Li Keqiang made it clear there would be no further devaluation.
That was unworthy of the world's second-biggest economy. Opacity and curbs on speech do nothing for the goal of structural reform and modernisation. Finance officials from the Group of 20 major economies meeting in Ankara were expected to call on China to increase policy transparency and communication with financial markets. Recent events show Beijing needs to be more forthcoming with information.