This year is set to start positively in terms of stock market performance, after equities trading on the Taiwan Stock Exchange and the over-the-counter Taipei Exchange last week rose 1.9 percent and 0.5 percent respectively. The TAIEX on the main bourse gained 26.83 percent and the over-the-counter TPEX rose 29.76 percent last year, the third and the fifth-largest increases respectively among the world’s major stock markets.
On the other hand, China’s benchmark CSI 300 Index last year declined 11.38 percent, dropping for a third consecutive year, while the Shanghai Composite Index shed 3.7 percent and the Shenzhen Composite Index fell 13.54 percent. Meanwhile, Hong Kong’s Hang Seng Index lost 13.8 percent over the year, making it one of the worst-performing markets in the world.
The sluggish performance of equities in China and Hong Kong reflected low investor confidence amid China’s weak economic recovery, a deepening housing crisis and mounting local government debts, as well as lingering geopolitical tensions. More importantly, a firm belief growing among Chinese investors is that Beijing is unlikely to step in and do anything more to support the market after authorities failed to respond to property problems in a timely, effective manner, while efforts to revive the economy were also considered slow and insufficient.
The Chinese government does not appear to have learned from its policy failures, as evidenced by Beijing’s rhetoric following its annual Central Economic Work Conference on Dec. 11 and 12, during which top leaders set economic targets for this year. Despite the announcement that policy adjustments would be stepped up to support an economic recovery this year, the agenda-setting meeting of top Chinese leaders also made it clear that increasing positive publicity about the economy and guiding public opinion to boost confidence is imperative to improving the economic situation.
In other words, the Chinese leadership aims to step up its propaganda regarding the economy this year and promote a picture that the country’s future is promising. Moreover, it showed that China plans to go on the offensive to stifle negative commentary about its economy and financial market.
It is clear that Beijing regards negative commentary on the economy as a security concern. It explains why the Chinese Ministry of State Security in the following days issued documents for three consecutive days warning that commentary badmouthing the Chinese economy intended to play down the country’s positive prospects. Wasting no time, Sina Weibo, WeChat and other social media in China also issued instructions against posting any bearish comments about the economy. Meanwhile, several finance influencers have disappeared entirely from social network platforms after voicing concerns.
This comes at a time when a growing range of topics are viewed by Chinese authorities as being sensitive to its economy. For instance, Beijing stopped publishing youth unemployment rates in August last year after the figures hit record-high levels, while several international research institutions were forced to withdraw from China as Beijing used anti-spy campaigns to target foreign consulting firms and curtail their access to the country’s data.
Beijing’s crackdown on negative commentary is likely to result in it making more mistakes, as in such an information space, the Chinese government is more likely to be fed inaccurate information, leading to further bad decisions, which would drag down the economy further, creating a vicious circle.
Although it is not hard to understand why the Chinese leadership would want to tone up the rhetoric about its economy, it is the public’s reality that matters more, because their lived experience and awareness of the economy can develop into real damage if the macro-level perspective continues to challenge the micro perspective, triggering growing questions.
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