China’s Crackdown on Rumors Will Only Hurt Its Economy

The New York Times
By THE EDITORIAL BOARD

China’s effort to prop up its stock market has taken a dangerous turn. Officials are arresting

The Forbidden City in Beijing on Sunday. Credit Fred Dufour/Agence France-Presse — Getty Images
The Forbidden City in Beijing on Sunday. Credit Fred Dufour/Agence France-Presse — Getty Images

people whom they accuse of spreading rumors about the market and the unrelated industrial explosions in Tianjin that killed scores of people last month.

The authorities have “punished” 197 people for spreading rumors about the stock market and the explosion, Xinhua, the state-owned news service, reported on Monday. One of those singled out was a reporter, Wang Xiaolu, who works for a leading business magazine, Caijing. China’s main state-owned TV network broadcast a video of Mr. Wang, who was arrested last week, “confessing” that he had caused “panic and disorder” in the stock market by writing a news story reporting that a government agency was seeking to withdraw money from the stock market just before share prices started tumbling. The Shanghai Composite Index has fallen about 37 percent from its recent high.

The crackdown smacks of desperation. China’s communist government is looking for scapegoats for its mistakes. The country’s leaders are primarily responsible for turning the stock market into a casino by encouraging individual investors to put their savings into the market and to borrow money to buy stocks. The Shanghai index more than doubled between the summer of 2014 and this June even as the broader Chinese economy was slowing. Beijing made another big mistake when it ordered state-owned businesses to buy stocks in a doomed attempt to prop up the falling market.     [FULL  STORY]

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