China Warns Economists Against Using the D-Word, Discussing Negative Trends

In a move reminiscent of a 2016 censorship, Chinese authorities are urging prominent local economists to avoid discussing negative trends such as deflation, in the midst of mounting concerns about Beijing’s ability to revive the second-largest global economy’s faltering recovery. 

Multiple analysts from local brokerages and researchers at esteemed universities and state-run think tanks have revealed that they have been instructed to refrain from expressing pessimism on topics spanning from capital flight concerns to weakening prices.

But the country’s most recent economic figures make that really hard:

According to well-regarded economists interviewed by the Financial Times, their employers have imposed restrictions on certain subjects, limiting public discussions. 

The China Securities and Regulatory Commission (CSRC), responsible for overseeing the stock market, has accused brokerage analysts of overstating economic risks. The economy is currently grappling with weakened consumer demand, declining exports, and a struggling property sector.

Government advisers from think tanks and brokerage firms have acknowledged the pressure to present economic news in a positive light to boost public confidence. A central bank adviser mentioned that regulators are wary of negative public comments about the economy and have encouraged experts to interpret adverse news optimistically.

Financial analysts noted that this growing self-censorship among economic professionals, who are relied upon by investors in a data-opaque market, highlights Beijing’s attempts to control information dissemination.

The recent clampdown on economic commentary follows a series of disappointing economic data releases that have undermined investor confidence, hampering Beijing’s efforts to drive a robust post-Covid rebound. 

While China’s producer price index has declined for consecutive months and consumer inflation stagnated, senior officials from official statistics and the central bank have categorically denied the possibility of deflation.

“As the entire market is aware, there is no such thing as deflation in China,” an unnamed well-known economist said at a closed-door conference in Beijing, according to the FT. “We could, however, talk about low inflation [risks],” they added.

“It will be bad if you don’t see me tomorrow,” the economist remarked.

Reports suggest that local television networks are now only receptive to positive economic comments, effectively silencing discussions about risks. Economists have resorted to euphemisms such as “subdued inflation” to navigate the restrictions and maintain a cautious stance on sensitive topics.

Information for this story was found via the Financial Times, Straits Times, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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