China's censorship dragnet targets critics of the economy

China's top intelligence agency issued an ominous warning last month about an emerging threat to the country's national security: Chinese people critical of the economy.

In a series of messages on his official WeChat accountthe Ministry of State Security implored citizens to understand President Xi Jinping's economic vision and not be influenced by those who sought to “denigrate the Chinese economy” through “denigrating the Chinese economy.”false stories.” To combat this risk, the ministry said, security agencies will focus on “strengthening economic propaganda and guiding public opinion.”

China is intensifying its crackdown as it struggles to regain the dynamism and rapid economic growth of the past. Beijing has censored and sought to intimidate renowned economists, financial analysts, investment banks and social media influencers for their bearish assessments of the economy and government policies. In addition, news articles about people experiencing financial problems or the poor living standards of migrant workers are removed.

China continues to offer an optimistic outlook for the economy, noting that it exceeded its forecast of 5 percent economic growth last year without resorting to risky, expensive stimulus measures. Beyond the numbers, however, the financial sector is struggling to contain huge amounts of local government debt, the stock market is faltering and the real estate sector is in crisis. China Evergrande, the high-flying developer with more than $300 billion in debt, was ordered into liquidation on Monday.

The new information campaign has a broader scope than the usual work of the government's censors, which has always closely monitored online talk about the economy. Their efforts now extend to mainstream economic commentary that was allowed in the past. The involvement of security services also underlines the way business and economic interests fall under Xi's increasingly expansive view of what constitutes a threat to national security.

In November, the Ministry of State Security call itself “loyal guardians of financial security,” other countries said, were using finance as a weapon in geopolitical games.

“Some people with ulterior motives are trying to cause trouble and profit from the chaos,” the ministry wrote. “These aren't just 'bears' and 'short sellers'. These market doomsayers are trying to shake the international community's investment confidence in China and cause domestic financial unrest in our country.”

Over the past year, China has targeted consulting and consulting firms with foreign ties through raids, detentions and arrests. These firms, which helped companies assess investments in the country, have become collateral damage in Xi's drive to strengthen national security. Such attempts to curb the flow of information, restrict the release of unfavorable economic data, and limit critical financial discourse appear only to heighten investors' and foreign companies' concerns about the true state of China's economy.

“In my opinion, the more the government suppresses negative information about the economy, the less confidence people have in the actual economic situation,” said Xiao Qiang, a research scientist at the School of Information at the University of California, Berkeley.

New foreign investment in China fell by 8 percent in 2023 to the lowest level in three years. China's CSI 300 index, which tracks the largest listed companies in Shanghai and Shenzhen, fell 12 percent last year, compared with a 24 percent gain in the S&P 500. The Chinese index is down another 5 percent this year to lowest point in almost five years.

Premier Li Qiang on Monday called for more effective measures to stabilize the stock market amid reports of a possible stock market rescue package.

Mr. Xiao, the research scientist, said that in the second half of 2023, he began to notice that Chinese censors were removing many financial news articles much faster. Among them: a December article on the financial news site Yicai that cited research showing that 964 million Chinese earned less than $280 a month.

This month, a NetEase News documentary about migrant workers with extremely low living standards was also taken off the internet. Search results for the documentary “Working Like This for 30 Years” were also limited on Weibo, a social media site similar to X.

Since June, Weibo has banned dozens of accounts from posting after it said they published “comments that mistreated the economy” or “distorted” or “smeared” China's economic, financial and real estate policies.

Weibo warned users in November not to be “maliciously pessimistic” about the economy and spread negative sentiments. Last month, the company said it hoped users would help boost confidence in the development of the economy.

Other social media services are also censoring negative statements about the economy. Douyin, China's version of TikTok, has specific rules that prohibit the “malicious misinterpretation of real estate-related policies.”

Liu Jipeng, dean of the Chinese University of Political Science and Law in Beijing, was banned from posting or adding new followers on Douyin and Weibo last month after saying in an interview that it was not the right time to put money into stocks . He also wrote on Weibo, where he has more than 500,000 followers, that it was difficult for ordinary people to invest safely because there were so many unethical institutions. On his Douyin account, where he has more than 700,000 followers, it says the user “must not be followed due to a violation of community rules.”

Banks and securities firms are also under intense scrutiny due to the content of their economic research. In June, the Shenzhen Securities Regulatory Bureau warned China Merchants Securities, a Shenzhen-based brokerage, on a “shoddily produced” report a year earlier that warned domestic stocks would remain under pressure due to the economy.

In July, Goldman Sachs sparked a selloff in Chinese banking stocks after one of its research reports gave three major lenders a “sell” rating and warned that banks could struggle to maintain dividends due to losses on local government debt . The Securities Times, a state-owned financial newspaper, hit back, saying the report was based on a “misinterpretation of the facts” and that “it is inadvisable to misunderstand the fundamentals of Chinese banks.”

An economist at a foreign securities firm said a Chinese government official recently asked the economist to be “more thoughtful” when writing research reports, especially if the contents could be interpreted negatively. The economist asked not to be identified for fear of reprisals.

Even once acceptable commentary has become problematic in light of China's current economic challenges.

In a 2012 interview, a year before Xi came to power, Wu Jinglian, a famous Chinese economist, warned that the country was at a turning point. He said China could move forward with a market economy governed by law, or the country could be influenced by those seeking an alternative agenda of heavy government involvement.

China's social problems, Mr. Wu said in the interview, “are fundamentally the result of incomplete economic reforms, serious delays in political reforms and increased administrative power to suppress and disrupt legitimate private economic activities.”

The interview was reposted last year to mark the 45th anniversary of the opening of China's economy. It was widely shared and called a rebuke of Xi's economic policies – which have pushed for greater state control at the expense of market reforms – before being removed from WeChat.

But the pressure campaign has become so intense that some who normally defend Beijing's policies have turned into critics. Hu Xijin, an influential commentator and former editor-in-chief of Global Times, a Communist Party newspaper, wrote on Weibo that the job of influencers is to “constructively help the government identify problems,” rather than actively cover them up and create. public opinion that is not real.”