[Continued from yesterday’s Part 1.]
By: David A. Smith
If life seems jolly rotten
There’s something you’ve forgotten
And that’s to laugh and smile and dance and sing.
Yesterday’s post conjoined the odd couple of Xi Jinping, president of China, and Graciela Bavacqua, at the time Argentina’s chief statistician, around the subject of the integrity (or lack thereof) of economic statistics, using as source material the Wall Street Journal (May 3, 2016) and Significance, December, 2012; Albiceleste font):
Beijing has moved to reassert control of the country’s economic story line after policy stumbles that contributed to selloffs in China’s stock markets and its currency last year –
If one cannot control the news, one can always retreat into seeking to control only the blame.
– fed doubts among investors about the government’s ability to navigate the slowdown.
At least we’re on the highway
Pressured by financial regulators bent on stabilizing the market, stock analysts at brokerage firms are becoming wary of issuing critical reports on listed companies.
As George Orwell would have agreed, along with suppressing bad news is the importance of suppressing the news of suppression.
He sees too clearly and speaks too plainly
While evidence of the clampdown is anecdotal –
Of course it’s anecdotal – statistics are being suppressed, so there is nothing left but anecdote.
– it appears widespread.
The reason for pushing a false narrative is both self-evident and self-interested.
During the past two months, the Communist Party leadership has been talking up the economy to try to reassure global markets.
China needs people to keep buying its paper and not selling anything, or there may be an accelerating downward price spiral.
If the rubes are foolish enough to believe it, probably runs the thinking, then they deserve it, don’t they?
When you’re feeling in the dumps
Don’t be silly chumps
Just purse your lips and whistle – that’s the thing.
At any rate, that was the philosophy in Argentina:
From the start Graciela Bevacqua was part of the staff responsible for the calculation of the Consumer Price Index (CPI), the fundamental measure of inflation.
In 1994 she was promoted to Associate Director of the CPI group of INDEC, and in 2002 stepped into the role of Director, filling a leadership void. “The promotion did not become official until 2005, when the then President Nestor Kirchner named me Director by decree. This was a rewarding time, not only because the promotion almost doubled my salary but also because it represented a recognition of my efforts over the several years during which I acted as Director with all the responsibilities but none of the benefits of the position.”
Ms. Bevacqua at home, after her firing
Naturally, moves to squash facts scare off the foreigners, because the foreigners not only have capital optionality, they also have freedom of information.
Some lower-level government officials describe a siege mentality that took hold among Chinese leaders and senior officials as international financiers like George Soros expressed gloom about the economic outlook early this year.
Apart from Mr. Soros’ politics, his nose for the opportunity to short has always been sensitive.
Yes, it’s as sensitive as Pierpont Morgan’s was
This message control risks further constraining information about the world’s second-largest economy, thereby deepening the anxieties of investors who already doubt the reliability of official statistics and statements.
But censorship is never about changing the foreigners’ minds; it’s aimed inward, at our own populace. So this analysis, though true, is largely irrelevant:
“Vigorous debate among economists and public confidence in this conversation is critical if China is to successfully navigate the choppy economic waters,” said Scott Kennedy, a deputy director at the Center for Strategic and International Studies, a Washington think tank. “If the party and government only want to hear good news, then they’d be better off hearing nothing because the value of the words would be less than zero.”
Do I look like I’m delivering good news about China?
That all depends on what China’s leadership’s objective is.
At high-level meetings the past few months in the walled Zhongnanhai compound where the leaders work, some senior officials called for quashing any criticism that might encourage foreigners to “short China”—or bet against the prospects for growth—officials with knowledge of the discussions say.
Come no closer
For President XI, confidence in China’s economy is an article of faith, and unbelievers are apostates who must be reminded of the way of light:
Early this year, President Xi visited the country’s three big state news organizations—Xinhua, the People’s Daily and China Central Television—to lecture them on the need to toe the party line, “tell China’s stories well” and enhance the nation’s influence in the world.
Remember the penalties for apostasy
For life is quite absurd
And death’s the final word
You must always face the curtain with a bow.
Forget about your sin – give the audience a grin
Enjoy it – it’s your last chance anyhow.
Aside from the intimidation element, that has to imply President Xi is badly worried.
Why did she take her stand? “The only thing I don’t want to lose is my prestige and credibility”, she says. “If I stop now  it would be like admitting that they are right and my fight over the past four years has been in vain.”
A ruler worried about a country’s economy would have to leave its television journalists likewise worried.
That, Chinese journalists said, has resulted in pressure not only to stay away from critical topics but to produce positive stories about the economy. Reporters covering the country’s stock markets, for example, have been told to focus their reports largely on the official statements issued by the China Securities Regulatory Commission, the stock market regulator, according to Chinese journalists.
In other words, pay no attention to the men behind the curtain.
So always look on the bright side of death
Just before you draw your terminal breath
Look for the silver lining
“As a Chinese reporter, you can do anything but journalism these days,” said a senior editor at a state-owned media outlet.
Print all the lies that fit?
One colleague, the editor said, was forced by the outlet to take a leave of absence over what senior editors considered the reporter’s aggressive investigation into the causes of last summer’s stock market crash.
Now you’ve been warned twice, Ms. Lin
Lin Caiyi, chief economist at Guotai Junan Securities Co. who has been outspoken about rising corporate debt, a glut of housing and the weakening Chinese currency, received a warning in recent weeks, officials and commentators said. It was her second.
The point of message pressure is not to change belief, merely to change what is vocalized.
Professionally, Graciela was compelled to trim the list of businesses from which INDEC took price samples.
“The demands from Moreno were daily. He challenged our data, our methodology and our results. Phone calls from Moreno were 40-minute-long shouting demands, asking for information to which, by law, neither he nor his office had any right. There was no stopping his bullying; even the Minister of Economics, who outranked Moreno, was cowed into serving as the go-between between Moreno and INDEC.”
A coordinated strategy of emphasis can intimidate.
Have I made myself clear?
The first came from the securities regulator, and the later one, these people said, from her state-owned firm’s compliance department, which instructed her to avoid making overly bearish remarks about the economy, particularly the currency.
The goal is not so much a chorus as a silence.
There’s authority and there’s economics, and you have to pick your side
That sort of squelching worked, at least in terms of controlling the narrative, in pre-information-era societies, when the Party could control all the news. As George Orwell, who dedicated his life to using truth in service of decency and whom I so often quote because his language is so clear and plain, distilled it via Winston’s tender torturer O’Brien:
O’Brien was looking down at him speculatively. More than ever he had the air of a teacher taking pains with a wayward but promising child.
‘There is a Party slogan dealing with the control of the past,’ he said. ‘Repeat it, if you please.’
‘“Who controls the past controls the future: who controls the present controls the past,”’ repeated Winston obediently.
Who controls the present controls the past
The industrial era was the apex of dictatorships, because the means of communication – newspapers and radio – could be concentrated in a few hands, and the means of warfare – factories – could operate on strictly hierarchical lines. In an era of global capital and global communications, the monopoly on information is broken, and that dramatically shortens the lifespan of dictatorships.
[Continued tomorrow in Part 3.]