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The central bank and regulators are now being more cautious about what they say to foreign economists. Photo: Reuters

Exclusive | 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

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 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 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."

This article appeared in the South China Morning Post print edition as: Beijing wary of foreign banks’ reports on debt