Few things are sure in China, but the government has called all hands on deck to regain control over the economy. Financial analyst Sara Hsu gives for the Diplomat an overview of the measures already taken to stabilize China´s financial industry.
If the economy cannot be easily swayed, the media can. Media discussion about economic conditions are at present closely monitored, and journalists have been jailed for publishing reports that depict economic and financial events negatively. A new law, going into effect on March 10, will require online media publishers to obtain approval before operating online. Foreign companies, including those in joint ventures, have been banned from producing digital content. Information on China’s economy is increasingly controlled. Notably, this month, the People’s Bank of China omitted data on financial institutions’ foreign exchange holdings, which might expose the scale of state interventions to bolster the RMB. This has left observers nervous about the true state of the economy.
In a final effort to reduce panic, control has required that China find individuals to hold responsible for the economic downturn. Xiao Gang, Chairman of the China Securities Regulatory Commission since March 2013, was ousted from his position, held responsible for China’s plunging stock market and failure of his circuit-breaker policy discussed above. Wang Baoan, head of the National Bureau of Statistics, was arrested after making a speech on the risks of capital outflows.
Worried yet? For many Chinese, and for long-time China hands, many of these events are familiar. Policy to curb panic, regulation to cover bad practices, suppression of information, arrest of top officials who go against (wittingly or unwittingly) the party line. All of these events taken together, and in a relatively short period of time with little good news to create hope, are disturbing, especially considering that China is attempting to restructure the economy wholesale. In order to do so, reforms need to keep coming, perhaps more rapidly, and uncertainty needs to be reduced, not by government guarantees but by more transparent data, clearer definition of financial and economic plans (particularly for the exchange rate), and a more marked government timeline and plan for reform. Beijing’s battle to regain economic control hangs in the balance.
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