As with many events that are negative but too big to ignore, China has taken a three-pronged approach.
First, make the bad news brief, stress other events and move on to other topics quickly. Second, emphasize the bright spots and, in the case of this economic collapse, signs of a rebound. And third, allow niche or economy-focused outlets some freedom to talk about the real situation so market players in the system can have a real conversation about it.
Resumption of factory production, office work and retail sales, as well as suspiciously stable unemployment numbers, were common themes across most media as soon as the GDP data were released Friday.
The flagship state-run voice of the Communist Party, the Xinhua News Agency, took a forward-looking approach, with its top headline, “Bent not broken: China’s economy eyes rebound after Q1 virus pains.”
“Though China’s GDP shrank 6.8% in the first quarter, unemployment rate, resident income and electricity consumption indicate a robust Chinese economy,” Xinhua wrote, adding: “The resilience of China’s economy has not lost its strength, but it has become more obvious and clear.”
The most popular editorial on the nationalistic Global Times website insisted that, “During a wartime economy, employment, not GDP, should be the bugle horn” signaling any distress. The convenience here is that China’s employment numbers are even more opaque than its GDP statistics, which themselves are frequently ridiculed for perceived manipulation.
Global Times added that, “-6.8% Q1 GDP is the result of a crisis rather than a mirror of its economic fundamentals. The contraction cannot be examined in historical context, as economic activities amid pandemic outbreak are incomparable with that of normal orders.”
China frequently issues private directives to media outlets when major events occur. Leakage of these gives a window into the way the state-media relationship functions in times of crisis or public relations turmoil.
A raft of coronavirus-related directives was leaked last week to the China Digital Times, an independent media-monitoring group affiliated with the University of California, Berkeley. The directives advised an approach in line with the three-pronged strategy outlined above.
As for the promotion of bright spots and alternative topics, major Chinese outlets published dozens of stories over the weekend of its offering of medical equipment and epidemic expertise around the world.
The positive news push isn’t just to deflect the impact of economic woes from the leadership but is also part of a campaign to restart China’s economy, analysts said. And arguing about how to do that or what went wrong in the last few months is an inefficiency Beijing need not tolerate.
The Chinese model, in contrast with democracies, “offers efficiency” in terms of assigning a cost to dissent, said Surya Deva, an associate professor at the City University of Hong Kong.
And the plan to kick-start economic activity is bolder than most realize. Just before the GDP numbers were released, China quietly published a documentoutlining the sweeping reforms it aims to undertake, ones that it may not have been able to secure high-level agreement before the economic collapse.
The extensive project includes land reform, the loosening of labor restrictions, further movement toward market-driven setting of prices for lending and deposit rates as well as for the yuan, and the promotion of technology in a range of areas to digitize China’s economy.
A rising concern of this ambitious resumption of production and sales is the increased chance of a second wave of infections in China, as crowds gather at workplaces and during commutes.
As for the unprecedented collapse in the country’s economic growth, that’s yesterday’s news.
Tanner Brown is a writer at MarketWatch and Barron’s and producer of the Caixin-Sinica Business Brief podcast.