But the important thing is that we can read it and report it – and thereby make ourselves look clever, or silly, depending on our interpretation. And we can talk to senior RBA officials and get a sense of why the decision was made and the thinking on the way the economy is going. The openness is invaluable. That applies to statistics from the ABS?—?the May retail and trade data out this morning will be crunched to produce ideas about how the economy is travelling.
But in China, no such reticence or trust from those with authority – when the cash is crunched, the media have to toe the line. As the Financial Times reported:
“With a cash crunch roiling the Chinese economy, propaganda authorities have told local media to tone down their reporting to help stabilise financial markets.
“In a directive written last week and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop ‘hyping the so-called cash crunch’ and to spread the message that the country’s markets are well stocked with money.”
“First, we must avoid malicious hype,” Chinese media were directed. “Media should report and explain that our markets are guaranteed to have sufficient liquidity, and that our monetary policy is steady, not tight.” Such direction is standard across the Chinese media, but rarer in the financial media. “Second, media must strengthen their positive reporting. They should fully report the positive aspect of our current economic situation, bolstering the market’s confidence. Third, media must positively guide public opinion. They should promptly and accurately explain in a positive manner the measures taken by and information from the central bank.”
The directive was issued last week after the Shanghai market dropped 10% (into correction territory) in a day and a half, and fears that more big falls would occur as the financial system froze from the central bank’s attempts to force up interest rates and curtail speculative lending by banks. Those fears have seen the central bank issue at least five statements in the past week about how it was leaving cash in the system, how it was being prudent, how the system was strong. These statements have been increasingly played up on Chinese media websites, starting with the two main mouthpieces?— Xinhua and the People’s Daily (English versions).
Another recent client note from Barclays Capital last week coined a new word to describe Chinese economic policy: ‘Likonomics’. As The Economist put it:
“Pronounced lee-conomics, the term has nothing to do with Facebook’s economy of endorsements. It refers instead to the emerging doctrine of Li Keqiang, China’s prime minister, who has overseen the country’s economy since March. The old command economy:?‘You shall report what we tell you to!’”
Of course, any similarities with the editorial conferences of the daily national newspapers here are entirely coincidental.
This article was first published on LeadingCompany’s sister site, Crikey.
