China’s top intelligence agency issued an ominous warning last month about an emerging threat to the country’s national security: Chinese critics of the economy.
In a series of posts on its official WeChat account, the Ministry of State Security pleaded with citizens to understand President Xi Jinping’s economic vision and not be swayed by those who sought to “hybridize China’s economy” through “false narratives.” To combat this risk, the ministry said, security services will focus on “strengthening economic propaganda and guiding public opinion.”
China is intensifying its crackdown as it struggles to regain the dynamism and rapid economic growth of the past. Beijing has censored and tried to intimidate prominent economists, financial analysts, investment banks and social media influencers for bearish assessments of the economy and government policies. In addition, news articles about people experiencing financial hardship or the poor living standards for migrant workers are removed.
China continued to offer a rosy outlook for the economy, noting that it beat its forecast for economic growth of 5 percent last year without resorting to risky, expensive stimulus measures. Beyond the numbers, however, its financial sector is struggling to contain huge amounts of local government debt, its stock market is in turmoil and its property sector is in crisis. China Evergrande, the high-end developer with more than $300 billion in debt, was ordered into liquidation on Monday.
The new information campaign is broader in scope than the usual work of government censors, who have always kept a close eye on online conversations about the economy. Their efforts now extend to mainstream economic commentary previously permitted. The involvement of the security services also highlights the ways in which business and financial interests fall under Mr. Xi’s increasingly expansive view of what constitutes a threat to national security.
In November, the Ministry of State Security, which calls itself the “stable guardians of economic security,” said other countries had used the funding as a weapon in geopolitical games.
“Some people with ulterior motives are trying to cause trouble and take advantage of the chaos,” the ministry wrote. “These are not just ‘bears’ and ‘short sellers.’ These market capers are trying to shake the international community’s investment confidence in China and cause domestic financial turmoil in our country.”
Over the past year, China has targeted consulting and advisory firms with foreign ties through raids, seizures and arrests. These companies, which have helped businesses evaluate investments in the country, have become collateral damage in Mr. Xi’s drive to bolster national security. Such efforts to restrict the flow of information, limit the release of unfavorable economic data and limit critical financial debate appear to only deepen the concerns of investors and foreign businesses about the true state of China’s economy.
“In my view, the more the government suppresses negative information about the economy, the less confidence people have in the real economic situation,” said Xiao Qiang, a researcher at the School of Information at the University of California, Berkeley.
New foreign investment in China fell 8% in 2023 to the lowest level in three years. China’s CSI 300, which tracks the largest companies listed in Shanghai and Shenzhen, fell 12 percent last year, compared with a 24 percent gain in the S&P 500. The Chinese index is down another 5 percent this year to lows of nearly five years old.
Premier Li Qiang on Monday called for more effective measures to stabilize the stock market amid reports of a possible bailout for the stock market.
Mr. Xiao, the research scientist, said he began to notice in the second half of 2023 that Chinese censors were quicker to remove many financial news articles. Among them: a December article on financial news website Yicai that cited research that said 964 million Chinese earned less than $280 a month.
This month, a documentary by NetEase News about migrant workers suffering from extremely low living standards was also pulled from the internet. Search results for the documentary “Working Like This for 30 Years” were also limited to Weibo, a social networking site similar to X.
Since June, Weibo has restricted the posting of dozens of accounts after it said they “posted remarks that maligned the economy” or “distorted” or “smudged” China’s economic, financial and real estate policies.
Weibo warned users in November not to be “maliciously pessimistic” about the economy and not to spread negative sentiment. Last month, the company said it hoped users would help “boost confidence” in the growing economy.
Other social media services are also moving to censor negative speech about the economy. Douyin, the Chinese version of TikTok, has specific rules that prohibit “malicious misinterpretation of real estate policies.”
Liu Jipeng, a dean at China University of Political Science and Law in Beijing, was banned from posting or adding new followers on Douyin and Weibo last month after he said in an interview that it was not the right time to put money into stocks . He also wrote on Weibo, where he has more than 500,000 followers, that it was difficult for ordinary people to invest safely because there were so many unethical institutions. Douyin’s account, where he has more than 700,000 followers, said the user was “banned from being followed for violating community rules”.
Banks and securities firms are also under intense scrutiny for the content of their financial research. In June, the Shenzhen Securities Regulatory Bureau warned China Merchants Securities, a Shenzhen-based brokerage, over a “carelessly produced” report a year earlier that warned domestic stocks would remain under pressure due to the economy.
In July, Goldman Sachs triggered a sell-off in Chinese bank shares after one of its research reports gave three major lenders a “sell” rating and warned that the banks may struggle to maintain dividends due to losses on local government debt . The Securities Times, a state-run financial newspaper, responded, saying the report was based on a “misinterpretation of the facts” and that it was “not appropriate to misunderstand the fundamentals of Chinese banks.”
An economist at a foreign securities firm said a Chinese government official recently asked the economist to be “more careful” when writing research reports, especially if the content could be interpreted negatively. The economist asked not to be named for fear of reprisals.
Even a once-acceptable commentary has become problematic in light of China’s current economic challenges.
In a 2012 interview, a year before Mr. Xi took office, Wu Jinglian, a renowned Chinese economist, warned that the country was at a turning point. He said China could move forward with a market economy governed by law or could be swayed by those seeking an alternative agenda of heavy government involvement.
China’s social problems, Mr. Wu said in the interview, “are essentially the result of incomplete economic reforms, a serious delay in political reforms, and intensified administrative power to suppress and interfere with legitimate private economic activities.”
The interview was republished last year to mark the 45th anniversary of the opening of China’s economy. It was widely shared and characterized as a rebuke of Mr Xi’s economic policies — which have pushed for greater state control at the expense of market reforms — before being removed from WeChat.
But the pressure campaign has intensified so much that it is turning some who normally defend Beijing’s policies into critics. Hu Xijin, an influential commentator and former editor-in-chief of the Global Times, a Communist Party newspaper, wrote on Weibo that it was the job of influencers to “constructively help” the government identify problems, “rather than actively cover them up and create the common opinion that is not real”.
