(NaturalNews) The Chinese government is known for its authoritarianism and secrecy, which helps explain why there has been a crackdown of sorts on any journalists seeking to report the truth surrounding China’s stock market plunge and economic disorder.
As noted by Zero Hedge, Chinese authorities have been working for two months to control not just the country’s stock market but also the narrative surrounding the market’s recent negative performance.
“After an unwind in the CNY1 trillion back alley margin lending complex sparked a late June selloff, China cobbled together a plunge protection team run by China Securities Finance (an arm of CSRC [China Securities Regulatory Commission]) and began intervening in the market,” Zero Hedge reported. “That effort has cost an estimated CNY900 billion so far.”
However, the financial news and commentary site noted, on July 20 the well-respected Caijing magazine suggested that the CSF was preparing to scale back market interventions that many believed had kept the Shanghai Composite, China’s main stock market index, from collapsing altogether.
$5 trillion in lost value
That report caused futures to slide in China in very short order, but the “rumor” was denied by the CSRC. And, as reported by Bloomberg Business, the reporter was quickly arrested for “spreading fake stock and futures trading information.”
The Chinese probe of the magazine and reporter was announced by Xinhua News Agency, the government’s official mouthpiece, which also called for efforts to “purify” the markets after a $5 trillion loss in trading value.
In addition, the news service carried quotes from a central bank researcher who attributed the market rout to an expected Federal Reserve rate increase in the U.S.
The Shanghai Composite Index has thus far nosedived more than 40 percent from its peak following concerns over the Chinese economy that sapped a months-long rally that had been artificially championed by state-run media.
Chinese authorities have repeated blamed market manipulators as well as foreign forces since the selloff began in June – which in turn led Beijing to adopt an unprecedented stocks-support program.
Visit MarketCrash.news for more breaking news on the unfolding market crash.
‘Authorities too involved’
After suspending the program, however, the Chinese government has since launched a blame game and fault-finding campaign.
“The authorities have been too involved in the stock market and now they’re trying to pass the responsibilities to others,” Hu Xingdou, an economics professor at the Beijing Institute of Technology, told Bloomberg Business. “In fact, they have to be responsible for the market crisis. It’s the authorities trying to act like a referee and a player at the same time.”
Included in the government’s investigation are anyone connected to the China Securities Regulatory Commission, Citic Securites Co. or Caijing magazine, on suspicion of offenses including illegal securities trading and spreading false information.
Bloomberg Business further reported:
They’re probing suspects linked to the CSRC, including a former employee, over insider trading and forging official document stamps, Xinhua said. Eight people at Citic Securities are suspected of illegal securities trading and the Caijing employees are under investigation for allegedly fabricating and spreading fake stock and futures trading information.
Also, Xinhua published a commentary urging stricter enforcement to cleanse the markets, Bloomberg Business reported.
Punish the messenger
“We have reason to believe that more criminals and their hidden crimes will be exposed,” the commentary said, as quoted by Bloomberg. “We also believe judicial departments will investigate thoroughly and impose punishments no matter who is involved in crimes.”
In addition, the Chinese government has launched a propaganda campaign blaming Western “hype” for China’s economic slowdown.
As noted by Reuters, the ruling Communist Party’s official paper, the People’s Daily, heavily criticized foreign doomsayers over their suggestion that China’s economic system would be badly shaken following the slowdown.
In a commentary published under the pen name “Zhong Sheng,” which means “Voice of China,” the writer said, “Some people around the world have rather impatiently spoken of the so-called end of the China model, or of a hidden financial crisis in China.
“Of course, Chinese people are already unsurprised by the selective thinking in Western public opinion,” the commentary added, reminding that commentators on the U.S. economy were far less alarmist after the bursting of the dot-com bubble in the early 2000s.