China’s plummeting stock market appears to be stabilizing — at least, according to the official narrative. “The correction in the stock market is already mostly over,” said the governor of China’s central bank on Sunday. Shares rebounded a few days later, as the benchmark Shanghai Composite Index climbed about 3%. While observers are keeping a close eye on the rise and fall of China’s stocks, many inside the country are still in the dark about the market’s downward turn of the past few months, prevented by state censorship from knowing beyond the official narrative.
“I know of the news, but I don’t know why [it happened],” said Yoyo Qu, a 34-year-old human resources employee in Beijing. “My friends who buy stocks expressed panic, but they also don’t know why.”
Shares began to fall in June. On August 24, Chinese stocks recorded the biggest slump in eight years, dubbed Black Monday by Chinese state media. For months, China’s economy sparked a flurry of speculations worldwide. Some said that reality — the slowing economy — eventually caught up and broke the past year’s bubble of superficial growth that nearly doubled the Chinese stock market up until June 12. Many talked about government incompetence and investors’ doubting the government’s ability to manage the economy.
All this was hardly covered in China. Even after Black Monday, state media focused on the upcoming military parade on September 3, which celebrated China’s military prowess and the end of Japanese colonialism 70 years ago. If covered at all, the media blamed the stock market crisis largely on the United States or the general depression in the global economy. Internet search terms were partially blocked and online material blaming the government were heavily censored.
A day after Black Monday, the official newspaper of the Chinese Communist Party was silent.
China has the world’s largest base of Internet users with almost 22% of the total web population. There are thought to be around 100,000 online censors, employed by both the state and private companies, working round the clock. August must not have been an easy month for them: on top of the stock market crisis, they had to police any inappropriate material regarding the military parade.
“Well, the Chinese censorship authorities actually have a pretty tough job,” an anonymous Internet activist told CBC Radio. “When it rains, it pours.”
Nearly 200 people were arrested for spreading rumors, most notably the financial journalist Wang Xiaolou. After publishing a magazine article suggesting that government support for the stock market was ending, Wang was detained and eventually made a public “confession” apologizing for causing panic at a sensitive time.
In July, a government propaganda directive was leaked to the public (not the Chinese public): “Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market…. Do not use emotionally charged words such as “slump,” “spike,” or “collapse.” Strictly report according to information released by the China Securities Regulatory Commission.”
The legitimacy of the Chinese government rests on a precarious balance between real economic prosperity and a heavily regulated public illusion that the prosperity stems from the state. The recent stock market crisis shows the increasing difficulty for the authoritarian state in maintaining the balance between the reality of a slowing economy and the necessary illusion that growth will be perpetual. For now, censorship will be the guardian angel of the state, putting out urgent fires and protecting the official narrative.