By Julian

My journalism course on China’s Mass Media had a guest speaker today — Arthur Kroeber, the managing director and head of research for Dragonomics and editor-in-chief of the China Economic Quarterly. Mr. Kroeber talked to us about the evolution of the business press in China since the reform and opening began in 1978, how economic reportage has contributed to expanding press freedoms on other fronts, and the problems that have arisen in recent years. I’ve posted the notes I took during his lecture. I’m sorry if they’re sloppy, but I was typing pretty fast:

One of the things that began to happen immediately after the reform and opening up period was the government’s greater tolerance of reportage about economic affairs. In the early 1980s, the Chinese government made the decision that although political reform was still “off the table,” there needed to be quite extensive economic reforms. It quickly became apparent that you couldn’t have an economic reform program unless you had open discussion.

So, throughout the 80s, publications emerged which were focused on economic issues. Interestingly, although these publications got started to cover economics, adventurous editors began to push the envelope of what was an economic matter.

In the 1990s, China’s stock markets began to take off. However, there were a lot of problems because the stock market wasn’t very well regulated, which lead to a lot of insider manipulation.

Around this time, many Chinese citizens who had studied economics and finance in America and abroad returned. The returnees ultimately persuaded the regulators of the stock market that it would be in their interest to promote an independent financial magazine whose function would be to investigate fraudulent activities in the stock market.

The most important resulting startup publication was Caijing (财经) magazine. Caijing established a reputation for being independent and of good standards. “They have a take no prisoners approach and report fearlessly on corruption.” However, more importantly, Caijing also began reporting on social issues—–though they steer clear of politics. Remember, for publications in China, it’s very difficult to judge which stories you can get away with covering and how far to go in doing so.

In 2003, when the SARS epidemic hit southern China, Caijing actually published a series of articles culminating with a cover story revealing local government cover ups. This was an experiment to see how far they could push the envelope—how far they could go. If the government accused them of exceeding their mandate—that is reporting on non-economic issues—Caijing could justify their reports by pointing out the importance of reporting on such events due to the economic impact SARS was having on Chinese commerce and international trade. Caijing was constantly pushing their reports further into the realm of revealing the social and political issues underlying the SARS crisis.’

Finally, the government decided that Caijing’s reports had gone too far and sent Caijing a serious warning. It didn’t dare shut down Caijing or impose greater sanctions because of the publication’s prominent international profile

In contrast, the local papers in the Guangdong area, where the SARS problems originated and who had also covered the social and political injustices behind SARS quite aggressively (exposing government cover-up efforts), were shut down and had their editors arrested and convicted (on trumped up charges of embezzlement).

Today, China has a very vibrant media. As long as publications are talking about economic and financial matters, they operate with a high degree of freedom. However, if they begin to deviate from the Party considers acceptable, or if they disagree with a recently made Party decision, they get warned to cease reporting on said subject matter.

For example, in 2003, there was concern that the RMB was being held at too low a value and there was a lot of pressure on the government to revalue it. This was reported on extensively, and for quite a long time—-probably because there was a debate within the government about what to do. Indeed, as long as there was a debate amongst members of the Party, there was a willingness to allow the press to debate the issue as well. However, when the Party ended its debate (but before they made an announcement), the government issued an order to stop discussing the issue—–and debate promptly disappeared. At that point the government had made up its mind about what it wanted to do and it felt that further discussion could potentially inflame members of the populace or decision makers, make management of the bilateral relationship with the US more difficult, and prejudice the timing of the revaluation.
So, that’s how things work in economic reporting in China.

There’s may be a lively debate, but at the margins it will always be constrained by the government’s ability to step in at any time and say, “ok, enough is enough.”

Additionally, there’s a high degree of self-censorship. Publications never know what’s going to induce the government to shut them down or arrest the editor, and they want their reportage to reach that provocative level. Publications step way back from that edge.

More problems:
1) One thing that has become a big issue recently is extortion and bribery between businesses and the business press. In the 90s, businesses would bribe journalists to write laudatory stories. Now, however, the press has such an influence on businesses’ stock prices that there’s the problem where journalists are extorting money from businesses. Reporters threaten to release exposure stories or even false stories unless they receive money.
2) The prices in the stock market have no relation to the quality of the companies. The business press could help find out a company’s real worth by looking into its figures, but China has such huge regulatory problems and poor accounting standards that there’s very little we (the business press) can do. The business press acts as a filter, guiding the public to look at what’s important about a company’s numbers, but if there’s no regulatory structure that forces the companies to put what is important into the public domain, the press can’t do much.

Julian, Cha Sha Bao