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May 13, 2024

China’s Bad Lending Data Vanishes from Social Media: Investors Left in the Dark

A series of research reports from Chinese brokerages on the country’s recent bad credit data disappeared from social media over the weekend, highlighting the increasing difficulty of getting reliable information about the world’s second-largest economy. At least seven research reports from mainland brokerages and securities firms that had been posted to WeChat by analysts were unavailable for viewing on Monday. The link to six of the reports now leads to an error message saying the content couldn’t be viewed after complaints about unspecified violations of rules governing public accounts.

A report from China Merchants Securities Co. was deleted from a WeChat account where the brokerage’s fixed-income analyst Zhang Wei usually posts research, according to a screenshot of the posting viewed by Bloomberg News. Reports from analysts at Zheshang Securities Co., Guosheng Securities Co., GF Securities Co., China International Capital Corp., Shenwan Hongyuan Securities Co. and Soochow Securities Co. were also unavailable for viewing or had been taken down before Monday morning. None of the seven companies responded to requests for comment.

China has increasingly hidden negative data over the past few years, making it harder for investors to accurately judge what is happening in the economy. The nation’s exchanges are set to switch off a live feed of foreign money flows into stocks as early as Monday, the latest example of closely-watched information being removed.

China’s the top securities newspapers attempted to put a positive spin on the data. A front-page article in China Securities Journal on Monday suggested the credit data would stabilize and pick up once the government started issuing more bonds. The central government said it will start selling ultra-long bonds from Friday, although that likely won’t immediately turn around the falling demand for mortgage loans from households or the weak demand from companies to borrow money.

Investors are left grappling with the lack of transparency and the increasing control over information dissemination. The disappearance of these research reports adds to the growing concerns about the reliability of economic data coming out of China. With crucial information being censored or spun to fit a narrative, investors face uncertainty about the true state of the Chinese economy, which can have significant implications for global markets.

The move to remove negative data and control the narrative may be an attempt to stabilize markets and maintain confidence, but it ultimately erodes trust and creates more uncertainty. Investors rely on accurate and timely information to make informed decisions, and the opaque nature of China’s data reporting undermines this fundamental principle. Without access to reliable data, investors are left guessing about the real health of China’s economy and its impact on global markets.

This episode underscores the challenges of investing in China and the risks associated with relying on information from a government that tightly controls data dissemination. As China continues to play a pivotal role in the global economy, the need for transparency and accurate reporting becomes increasingly urgent. Otherwise, investors may find themselves navigating murky waters with limited visibility, making informed decision-making nearly impossible.

Jhumpa Lahiri

Jhumpa Lahiri

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