'Don't Panic,' Say China's State Media, Amid Ongoing Market Mayhem


2015.07.06
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china-stocks-cartoon-07062015.jpg Cartoon by RFA cartoonist Rebel Pepper, July 6, 2015.
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The ruling Chinese Communist Party used its official media outlets to crank up positive propaganda surrounding the country's plummeting financial markets on Monday after a government intervention over the weekend, amid warnings that online "rumor-mongers" will be detained.

"Firm confidence instead of panic should be held for China's capital market as market risks are within control and fragile market sentiment will be reversed," the party's official People's Daily newspaper said in an editorial on Monday.

In a bid to reassure investors that tumbling share prices are a top priority for the government, the paper said that China has "sufficient tools" to stem the carnage, that saw the benchmark Shanghai Composite Index fall by nearly 30 percent in the past three weeks, with some 12 percent of its value lost last week.

"China has sufficient tools to bring the stock market back to sound footing as the economy keeps improving and the liquidity remains abundant," the People's Daily said.

It said the government is now engaged in "emergency and supportive measures to stabilize market sentiment."

The official Xinhua news agency chimed in with similar wording aimed at rebuilding shattered confidence, as investors took cover in the country's over-supplied property market.

"China remains confident to achieve a stable and sound development of its capital market as a raft of supportive measures is expected to smooth out the stock market volatility," the agency said in an opinion article on Monday.

"Though the recent losing trend in the stock market has rattled investors, pessimism about the future is uncalled for," the article said.

Pointing to government measures to cut new share issues and put pressure on major brokerages to buy up shares, with interest cuts and easier credit promised by the central bank, the article said the market will "be back on [a] sound footing."

Propping up markets

The authorities have persuaded the country's biggest brokers to help prop up the markets, with 21 major securities firms pledging to pump no less than 15 percent of their total net assets into tracker-style funds.

Under the measures, 28 Chinese companies that had initial public offerings (IPOs) approved and in the pipeline said they would postpone any further tranches of new shares.

The authorities have also stepped up a crackdown on online posts linked to market movements, with the China Securities Regulatory Commission announcing probes into three cases of "rumor-mongering" on Friday.

The rumors were specifically linked to "incorrect" social media posts and retweets of reports that people had killed themselves in connection with the plunging markets, and the police have placed three people under criminal detention, according to an official police posting on social media.

The media had "exaggerated" reports of suicides linked to financial losses, and had failed to confirm reports that it received, leading to further market instability, the CSRC said.

"They are trying to investigate rumors so that people won't dare to pass on news online of people who committed suicide because of the stock market," Hebei-based veteran journalist Zhu Xinxin told RFA on Monday.

"Actually, there have been suicides of people jumping from buildings that they haven't reported on."

China's State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) has already issued a directive warning broadcasters to play down reports related to the stock markets.

"No commentaries or expert discussions or live reports from the scene, no in-depth analysis or conjectures or evaluations of the direction of the stock markets are to be arranged," the directive said.

"There is to be no atmosphere of panic or gloom, and sensational language like 'crash,' 'boom' and "'collapse' are not to be used," it warned.

Zhu said the government is basically afraid of any information that could prompt any sort of extreme reaction.

"They are basically afraid of any kind of social disturbance, which could lead to the collapse of the entire stability maintenance system," Zhu said.

Historically, large falls in the stock markets have triggered wider social movements and threatened political regimes, he said.

But he said the government's efforts to shore up the markets may not have much effect.

"The stock market doesn't work like that," Zhu said. "They can't rely on their [political] power to force the financial markets to bounce back."

He said the optimism that once prevailed among the country's army of individual investors is no longer there.

"People no longer have any sort of illusions about the Chinese Communist Party; it's not like it was a few years ago," Zhu said.

"People will make up their own minds independently of what they do, and they won't blindly follow the government's directions."

No trust in state media

Xi'an-based independent journalist Ma Xiaoming said part of the problem lies with a lack of public trust in the official media.

"There are a lot of things that may or may not have happened, but nobody knows whether they really did or not, because you can't find that out from the official media," Ma told RFA.

"Under such circumstances, people rely on individual posts as a source of information."

China's official Internet censors were hard at work on Monday deleting posts on the Twitter-like platform Sina Weibo, where "stock market" was the second-biggest trending search term.

"Now the stock market has had its medicine administered, the posts start to fly," Weibo user @bachuliujun12 wrote in a deleted post cached by the Free Weibo website on Monday.

"This shows that the people have less and less trust in the government, and fear it less and less, and the government is now the target of their ridicule," the post said.

"This sort of ridicule won't dissipate public anger, but it could entirely subvert the regime."

Another Weibo called for the People's Daily to be investigated for rumor-mongering after writing that "4000 points is the start of a bull market."

Reported by Yang Fan for RFA's Mandarin Service, and by Wong Lok-to for the Cantonese Service. Translated and written in English by Luisetta Mudie.

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