
China Censors Bad Economic News Amid Signs of Slower Growth - CPAhem
https://www.nytimes.com/2018/09/28/business/china-censor-economic-news.html
======
mabbo
This should really terrify us all.

The Chinese economy is not just inflated, it's now an enormous chunk of the
world economy. Throw in their really wild housing bubble [0] and it's a time
bomb. Globalization has made everything cheaper, but it's tied us all together
in many ways. They won't fall over alone.

Hiding news that the economy isn't doing well distorts incentives. Those with
political connections will know what's really happening and take full
advantage. Those without will make poor choices. Like buying a 4th unfinished
condo as an investment.

[0][https://www.bloomberg.com/view/articles/2018-06-24/why-
china...](https://www.bloomberg.com/view/articles/2018-06-24/why-china-can-t-
fix-its-housing-bubble)

~~~
rqs
Actually, before the trade gone bad, many local governments in China already
installed some limits on the housing bubble. For example, in some place, you
can only buy house, but unable to sell it. This will limit how many money can
flood back to the economy.

So far, that policy is effective. After all, nobody want to play the Japanese
character during what's after the "Japanese economic miracle"[0]. And the
housing bubble thing is like textbook example of "How not do your economy".

[0]
[https://en.wikipedia.org/wiki/Japanese_economic_miracle](https://en.wikipedia.org/wiki/Japanese_economic_miracle)

~~~
seanmcdirmid
This has always been true though. The government basically controls the real
estate companies, and they won’t list/show your house beneath a certain price.
When prices weaken, volume simply plummets as no one can sell because the real
estate companies won’t allow for discounting. That isn’t a really a new thing,
it has been going on for at least a decade.

In many cases, what we have in China is much worse than japan since artificial
intervention is much deeper and prolonged.

~~~
panarky
Not only in China.

In 2010, the US Securities and Exchange Commission restricted the ability to
sell shares short if the share price has declined more than 10%.

[https://www.sec.gov/news/press/2010/2010-26.htm](https://www.sec.gov/news/press/2010/2010-26.htm)

Curious how there is no equivalent restriction on purchases if the share price
has increased by 10%.

~~~
slededit
It’s a very temporary restriction not at all comparable. It applies only until
the next uptick and is essentially a strengthening of the circuit breaker
rules.

These rules are designed to slow trading down on the order of minutes to hours
so market participants can catch up and make rational decisions. This is
completely different than broad market distortions pervasive in both Japan and
China - both in intent and effect.

~~~
panarky
_> These rules are designed to slow trading down_

If this were true, then there would be a symmetric rule to restrict purchases
when prices increase.

Since the rule only restricts sales and not purchases, its purpose must be to
prevent price declines, not to regulate the velocity of trading.

~~~
slededit
Unlike with upswings, down swings come with margin calls which can cause
downward spirals. The market can certainly get irrational on the upswing as
well but the feedback mechanisms are more muted and slower.

------
alecco
The kind of "bad economic news" censored:

TABLE-China bond defaults rise over 56 pct from 2017 at $8.74 bln

[https://www.reuters.com/article/china-economy-
defaults/table...](https://www.reuters.com/article/china-economy-
defaults/table-china-bond-defaults-rise-over-56-pct-from-2017-at-874-bln-
idUSL8N1WD3CR)

~~~
paradite
How about stopping the baseless accusations thrown at China?

[http://finance.sina.com.cn/money/bond/research/2018-04-13/do...](http://finance.sina.com.cn/money/bond/research/2018-04-13/doc-
ifyteqtq9368408.shtml?cre=tianyi&mod=pcpager_fintoutiao&loc=1&r=9&doct=0&rfunc=100&tj=none&tr=9)

[http://finance.sina.com.cn/money/bond/2018-08-31/doc-
ihinpmn...](http://finance.sina.com.cn/money/bond/2018-08-31/doc-
ihinpmnq8345092.shtml)

[http://finance.sina.com.cn/money/bond/research/2018-06-15/do...](http://finance.sina.com.cn/money/bond/research/2018-06-15/doc-
ihcyszrz8981691.shtml)

[http://bond.jrj.com.cn/2018/09/30133825154607.shtml](http://bond.jrj.com.cn/2018/09/30133825154607.shtml)

[http://bond.hexun.com/2018-08-01/193639187.html](http://bond.hexun.com/2018-08-01/193639187.html)

Edit: Looks like I'm being flagged for pointing out the false accusations?
Slowly losing my faith in HN.

~~~
King-Aaron
> How about stopping the baseless accusations thrown at China?

Apologies, but all the links you posted are in chinese, and google translate
just turns them into mostly garbage so Im struggling with the context of your
comment.

But I'm not sure what this issue here is, the user above you pointed out "the
kind of information being censored" as an example of what's being discussed in
the parent article, and that seems unrelated to the argument "Stop throwing
baseless accusations about X".

Is the problem with the accusation that China is censoring economic
information, or is it that the default rate as used in this example is
inaccurate?

~~~
paradite
The example is inaccurate, or rather false and misleading.

~~~
King-Aaron
Welllllll I don't really think that was the point of the comment, rather it
was showing an example of what content has been blocked.

~~~
paradite
I'm not sure where the misunderstanding is.

The article is about censoring economic news.

The top comment suggests an example of economic news that is censored.

Anyone reading the comments would assume that the example news is indeed
censored.

However, that was not the case, as shown in the links I provided. (If they
were censored, the pages would have been taken down retrospectively)

I'm pointing out that example is a false accusation of the content being
censored.

~~~
mads
What were the links posted? They were flagged and removed.

~~~
paradite
Just some links to articles in Chinese websites that talks about defaults
recently:

[http://finance.sina.com.cn/money/bond/research/2018-04-13/do...](http://finance.sina.com.cn/money/bond/research/2018-04-13/doc-
ifyteqtq9368408.shtml?cre=tianyi&mod=pcpager_fintoutiao&loc=1&r=9&doct=0&rfunc=100&tj=none&tr=9)

[http://finance.sina.com.cn/money/bond/2018-08-31/doc-
ihinpmn...](http://finance.sina.com.cn/money/bond/2018-08-31/doc-
ihinpmnq8345092.shtml)

[http://finance.sina.com.cn/money/bond/research/2018-06-15/do...](http://finance.sina.com.cn/money/bond/research/2018-06-15/doc-
ihcyszrz8981691.shtml)

[http://bond.jrj.com.cn/2018/09/30133825154607.shtml](http://bond.jrj.com.cn/2018/09/30133825154607.shtml)

[http://bond.hexun.com/2018-08-01/193639187.html](http://bond.hexun.com/2018-08-01/193639187.html)

~~~
pas
I interpreted OP's comment as meaning that this particular reuters link is
censored, not necessarily all URLs with the same semantic content. Probably
censors are not vigilant enough.

~~~
notabot
The context of the NYT article is that bad news in Chinese media is censored.
GP already said "the kind of ...", which was not about a specific piece or a
specific link, so it would be natural for me to interpret GP's comment as "the
semantic content about defaults is censored in China", which is not true
according to @paradite.

------
lolc
The interesting thing for me here is a problem with all censorship: Those
doing the censoring need to understand the issue to work effectively. So the
censorship bulletins need to provide enough information that they become a
source of truth. It gives investors an incentive to read them, because they
are a factor in where the market moves.

~~~
07d046
I think it's partly censorship, and partly the secrecy around the creation of
economic (and other) data. When people are incentivised to report inaccurate
data and have the ability to do so, they will. This is an old problem. Emperor
Kangxi developed a secret palace memorial system in the seventeenth century to
learn from trusted eunuchs if the grain prices his senior officials were
reporting were accurate, and if his son was a monster, and things like that.

------
datavirtue
Chinese "leaders" are in way over their head trying to direct the economy. Now
they don't know what the people really know. Something tells me that clear and
open information is the best choice but they have already gone down the rabbit
hole.

~~~
toss1
Yes, and even if the are actually fully informed and very skilled, there are
severe limitations on what "management" of press and psychology can do.

In an economy, an excess must eventually be corrected. The problems are that
it's a dynamic super-multi-variable system and tends to overshoot in both
directions. Ideally, an excess would self-correct soon and gently, but many
information loops have too long a lag. Hence, the warning that "markets can
remain irrational longer than you can remain solvent".

In cases where the bubble is moderate, 'management' may well keep the
psycology from falling too far and overcorrecting, buying time, so that the
situation can correct without a crash.

However, it also continues the excess for far longer, and often allowing a far
greater degree of excess. So, if the excess breaks through the management, the
crash will be _ _much_ _ steeper and deeper, overshooting far on the downside.

I'm not sure if the PRC doesn't understand this risk, or if it does and is
just in too deep to do anything else.

Either way, it is a seriously growing risk for them and globally.

~~~
datavirtue
They way to prevent irrational markets out running your solvency is to avoid
easy lending/borrowing in the good times.

~~~
toss1
Of course, but the Chinese needed to do that a decade ago -- it is way too
late for that now...

Usually the central banks serve that function by raising interest rates in
better times as the economy heats up. China's? Not so much. Seems they might
need to learn this lesson the hard way.

------
rossdavidh
Cannot help but wonder if we are seeing, right here in this comment section
here, people paid to counter any discussion of a bad Chinese economy. Of
course, I'll probably never know for sure.

~~~
gwern
Chinese censorship doesn't appear to work that way: largely domestic, and
focused on adding friction and distraction rather than criticism/rebuttal -
[https://qz.com/311832/hacked-emails-reveal-chinas-
elaborate-...](https://qz.com/311832/hacked-emails-reveal-chinas-elaborate-
and-absurd-internet-propaganda-machine/)
[https://gking.harvard.edu/50c](https://gking.harvard.edu/50c)
[http://scholar.harvard.edu/files/gking/files/experiment_0.pd...](http://scholar.harvard.edu/files/gking/files/experiment_0.pdf)

------
bayesian_horse
It would really have surprised me to hear that they didn't.

Though there seems to be some relevance to the government's numbers, otherwise
the market would totally ignore them.

------
ciucanu
I wouldn't be surprised to read this kind of news about some of the Eastern
Europe countries in the future.

~~~
switch007
I wouldn't be surprised to read this kind of news about Western European
countries in the future !

~~~
ciucanu
East 2nd, East 2nd, at least this time.

------
buboard
When your business is to run a regulated economy, neglecting to censor the bad
news would be a bad sign for your investors.

------
glandium
I'm not particularly convinced this is much worse than what happens in the
west, where people get their news from biased sources, be they Fox News, CNN,
or Facebook. Sure, there's the theoretical difference, censorship is bad,
etc., but practically speaking, the result does not feel that different...

~~~
charlysl
It is much worse, given that in the west biased reporting and cover ups can be
publicly denounced, whether by other biased sources at the other end of the
spectrum or in social media, whereas in China it is not allowed to disclose by
any means that bad economic news is being suppressed.

~~~
cmoscoso
Unless you are Alex Jones.

~~~
sgift
Last time I checked he was fully able to spit whatever nonsense he wanted out
into the world without being send to any reeducation camps.

~~~
mistermann
Whether anyone in the mainstream will encounter his message is another matter.
Pointing out that no rights have been violated entirely misses/avoids the
point.

------
arnoldtheai
Trump does exactly the same. What's the difference.

~~~
gaius
I guarantee that Trump has zero influence on how the NYT reports on the
economy.

~~~
phyller
That's not true, if a piece of economic information would be damaging to Trump
it would likely get even more coverage.

~~~
seanmcdirmid
Isn’t that the opposite of influence though?

~~~
justtopost
Not if you know how to spin it. Like him or not, Trump is unquestionably good
at getting 'bad' press to work in his favor. Any power, positive or negative,
can be harnessed if you are clever enough. To what end, well, thats a
different discussion.

------
yAnonymous
I want to condemn this, but given the current state in western countries, I'd
feel like a hypocrite.

We have so much light censorship and politicians get to lie without any
consequences. The institutions who play along are rewarded and those who try
to speak out about it are discredited.

There's illegal surveillance that we only get to know about from
whistleblowers.

Political correctness is used to silence millions of people and invalidate
opinions without having to debate anyone.

Elections are won through illegal social media campaigns.

If anything, China is copying us.

~~~
virmundi
I agree with the general thesis that many different forms of censorship occur
in the West. I agree that the Left tends to use political correctness as it’s
means to make people fear being called a bigot. However no one illegally won
an election from outside sources. The Russians paid about 100k in ads on
Facebook. Doris spent millions. We have more to fear from internal threats
than from external.

China is not copying us. Corruption is universal. It’s a question of degrees.
The US has less corruption and more access to correct what does exist than the
Chinese. What they learned from us, if anything, is how technology can control
things. Given that they’ve had advanced tech on the past and did similar
things to suppress inconvenient truth, I’d say they are pretty much doing what
they’ve always done back to the days of the emperor.

