Disappearing Research Reports Highlight China’s Trend of Hiding Negative Economic Data

In light of China’s recent surprising drop in credit demand, brokerage firms in the country have experienced difficulties in disseminating accurate information about the economy. Seven research reports from mainland brokerages and securities firms, published over the weekend by analysts, have disappeared from social media platforms such as WeChat. Analysts from companies like China Merchants Securities, Zheshang Securities, Guosheng Securities, GF Securities, China International Capital Corporation, Shenwan Hongyuan Securities, and Soochow Securities reportedly had their reports made unavailable or deleted from their respective WeChat accounts. None of these firms responded to requests for comment regarding this matter. This development highlights the growing trend of China hiding negative economic data in recent years, making it increasingly challenging for investors to accurately assess the state of the economy. Last week, the country’s stock exchanges announced plans to discontinue live streams of foreign capital inflows into equities starting as soon as Monday, further illustrating the tendency towards concealing negative data. The recent credit data revealed that total credit demand decreased for the first time since 2005, leading some Chinese publications to suggest that it would eventually rebound following the release of additional bond issues by the central government. However, experts believe that this may not immediately translate into a resurgence in mortgage loan demands by households or companies looking to borrow money. The unfolding scenario adds pressure on the Chinese government to increase spending and on the central bank to provide further support through measures such as reducing reserve requirements ratios and cutting interest rates. Nonetheless, prior attempts at monetary easing have failed to mitigate the ongoing real estate crisis in the country, which entered its third year in March. As a result, some experts predict that the central bank could potentially reduce its reserve requirement ratios and lower its benchmark interest rate in the coming weeks.