Chinese Censors Order Local Media to Tone Down Coverage of Cash Crunch

With liquidity fears rattling Chinese markets, propaganda officials have taken the rare step of giving TV stations and newspapers guidelines for their financial reporting.

As concerns over a cash crunch shake up investor confidence in the Chinese economy, the country’s propaganda ministry has taken the rare step of telling media outlets to tone down their coverage of the local liquidity issues.

Chinese propaganda departments regularly issue directives to state and private media outlets on how to frame issues and which catch phrases to use when covering sensitive political issues. But the media has usually been given free rein in terms of financial reporting -- given that the Chinese economic story has been a consistently positive one over recent years.

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That changed this week, when a Communist party dictate written last week -- during the worst of the recent liquidity crisis, when the Chinese stock market fell 10 percent -- began arriving at newspapers and television stations, instructing reporters to stop “hyping the so-called cash crunch,” the Financial Times reports. 

“First, we must avoid malicious hype. Media should report and explain that our markets are guaranteed to have sufficient liquidity, and that our monetary policy is steady, not tight,” the order said, according to a text obtained by the FT.

“Second, media must strengthen their positive reporting. They should fully report the positive aspect of our current economic situation, bolstering the market’s confidence,” it went on. “Third, media must positively guide public opinion. They should promptly and accurately explain in a positive manner the measures taken by and information from the central bank.”

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In June, Chinese banks began suffering a liquidity squeeze as they and other lenders scrambled for funds. While the Chinese market has recovered some of its loses, the phrase “cash crunch” is still being used in Chinese headlines, as local markets remain somewhat volatile and concerns over the unwinding of the credit bubble run high.

According to the FT, however, the government dictate appears to be working: Local media coverage of the country’s new financial woes appears to have softened across the board.