China stock market crackdown: Chinese government arrests nearly 200 over 'illegal rumour-mongering'

Lauren Fedor
Follow Lauren
The headquarters of China’s state broadcaster, which aired a confession by a journalist accused of spreading “panic and disorder”
City figures launched a broadside against China’s government last night, after authorities spent the weekend rounding up nearly 200 people deemed guilty of “illegal rumour-mongering”.
Beijing appears to have lost faith in its ability to stem a decline in China’s shares through large-scale purchases. Instead, it has turned on traders, social media users and journalists whom it accuses of exacerbating last week’s market volatility.
“It’s a joke. They don’t know what they’re doing,” said Alastair Winter, chief economist at City broker Daniel Stewart & Co. “I certainly wouldn’t advocate anybody putting money into China at the moment. They’ve just lost it. I think they’re going from disaster to disaster.”
George Magnus, an associate at Oxford University’s China Centre and a senior adviser to UBS, told City A.M. that the government’s actions over the weekend were “risible” and “unacceptable”, saying: “This is just picking on scapegoats.”
“The conduct and belief system which underlies their behaviour is not what cuts the mustard when it comes to investor confidence,” he added.
Earlier in the day state TV aired a confession from a local financial reporter who had been detained last week, in which he admitted to having spread false information that caused market “panic and disorder”.
The treatment of reporters has drawn sharp criticism from human rights groups and raised concerns in the Square Mile.
China’s ministry of public security yesterday published a statement saying that 197 people were accused of “violations” that “caused panic, misled the public and resulted in disorders in stock market or society”.
Wang Xiaolu, a reporter for the Caijing business magazine, said: “I shouldn’t have sought to make a big splash just for the sake of sensationalism.” It remains unclear whether Wang made his confession under coercion, but campaign group Reporters Without Borders came to his defence: “The accusations against Wang are symptomatic of the Chinese government’s desire to control media coverage of share price movements.”
“Suggesting that a business journalist was responsible for the spectacular fall in share prices is a denial of reality,” they said, adding: “Blaming the stock market crisis on a lone reporter is beyond absurd.”
Jason Hollands, a managing director at Tilney Bestinvest, told City A.M.: “There was a widespread view that Chinese authorities were very effective managers, both of state policy and the economy. But I think the lurching policies have really caused investors to wake up.”
“It’s not just what’s been happening on the local exchanges, but the damage to Chinese credibility on the international stage,” he added.
“That makes us very cautious when you are investing in a market where ultimately the government can step in and direct businesses, even listed businesses to do its bidding.”
Bloomberg reported that Li Yifei, a well-known business figure in China and chairwoman of Man Group’s Chinese business, had been taken into custody as part of an official probe into recent market fluctuations.
Chinese equities have plunged about 40 per cent since June on concerns of a slowing economy and a surprise devaluation of the yuan last month.

Related articles