Opinion | China’s aversion to bad news about the state of its economy is both unsettling and counterproductive

There seems to be a negative correlation between the Chinese government’s tolerance for bad economic news and the actual state of the country’s economy. Over the past several years, Chinese authorities have been using the same phrase – “stable with good momentum” – to describe the country’s economic performance.

Efforts to defend that official narrative have intensified this year, as the country’s post-coronavirus economic recovery slowed amid mounting problems. A crisis of confidence has emerged in the world’s second-largest economy because of these problems, which include record youth unemployment, deepening demographic issues, the property crisis and simmering US-China tensions.

To some foreign investors, the narrative about China has swiftly changed from being an attractive investment destination with unlimited growth potential into a landmine full of economic, regulatory and geopolitical risks for investment. That rapid shift in external perception, according to some observers in Beijing, was partly the result of a “cognitive warfare” waged clandestinely by hostile forces in the West to tarnish China’s image and hurt the country’s development.

Beijing’s knee-jerk reaction has been to stop releasing certain data that could be used to bad-mouth the country’s economy. The government’s move last month to stop publishing youth unemployment data ignited concerns over transparency and economic ramifications because those figures are vital for economists and investors to accurately gauge the state of China’s slowdown.

Authorities have also been ruthless in curtailing economic analysis that runs counter to the official view. Online discussions about local governments’ debt, the yuan exchange rate or wealth inequality are often silenced by shutting down the offending social media accounts. At home, predictions about China’s prospects that are less than rosy are not welcome.

China has also been more combative to external criticisms even though efforts to suppress these views can sometimes fall flat. The Ministry of Commerce, for example, asserted that Rhodium Group data on decreased foreign direct investment in China was incorrect. The ministry, however, had to admit that foreign investment inflows fell by more than 5 per cent in the first eight months of the year.