(Bloomberg) — Chinese officials are taking new strategies to shape a positive narrative about their country’s economic slowdown. It is about disclosing favorable economic news early to stimulate the market.
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The latest example came on Thursday, when Vice Finance Minister Liao Min highlighted bright spots in the budget statistics at a press conference in Beijing. His comments lasted an hour longer than the monthly statement, which typically provides information without comment.
“We believe this will have a positive impact on accelerating economic recovery,” Liao said, noting that the budget disbursements in January and February were the fastest in nearly five years. He downplayed the less rosy numbers that may have caught investors’ attention, explaining that the revenue decline was distorted by base effects.
Premier Li Qiang started this trend in January with early confirmation at a major Swiss forum that China had achieved its 2023 growth target. His revelations came a day before official figures were released, allowing China’s second-largest leader to tout China’s ability to achieve its goals without large-scale stimulus.
Later that month, central bank governor Ban Gong-sheng took the unusual step of personally announcing a cut in banks’ reserve requirements, 12 days before the cut took effect. This move triggered a rally in Chinese stocks and bonds. This month, Minister of Commerce Wang Wentao revealed an unexpected surge in exports in a high-profile press conference the day before the statistics were due to be released.
The change in management signals that authorities are stepping up efforts to boost confidence in China’s economy, as the real estate crisis and weak domestic demand have soured domestic sentiment. Foreign investors say they are experiencing “promise fatigue” over Beijing’s promises to improve their business environment.
“This suggests that economic officials are feeling some political heat,” said Christopher Bedore, deputy director of China research at Gabekal Dragonomics, after a flurry of early announcements. He added that all the “strange revelations” have one message in common: “Either things are better than expected, or the authorities are taking steps to make things better.”
The new strategy follows calls by leaders to extend their bullish views on the economy at their December meeting. China’s post-pandemic recovery last year was disappointing, in part due to geopolitical tensions and a decline in investor confidence due to years of coronavirus curbs and policy fluctuations.
In line with this call to generate positive news around the economy, People’s Bank of China Vice Governor Xuan Changneng on Thursday reiterated his boss’ promise earlier this month that there is still room to lower reserve requirement requirements.
Chinese stocks briefly rose following his comments. But overall, early announcements have less of an impact on the market as investors take time to evaluate signals, said Bruce Pang, LaSalle’s chief economist for Greater China. It is said that they are doing so.
“Teachers are underlining important points,” he added. “But it will take time and patience for investors to verify how important that message is.”
Government agencies have previously been accused of trying to hide negative data, including temporarily suspending publication of some indicators and changing the way they are calculated. Such sudden moves only fuel investors’ fears about the ruling Communist Party’s increasingly opaque policy decisions.
The Office for National Statistics stopped publishing monthly figures on industrial profits for several months in 2022, when the numbers were falling. After youth unemployment hit a record high in June, authorities paused publishing that data for several months before releasing rosy numbers that excluded students.
This month, another adjustment was made to that featured dataset. NBS’s monthly press conferences, which have become customary in recent years, will no longer be made public. Instead, it will be published to an online database at an unspecified time. Officials did not explain the change in strategy.
Policymakers have set ambitious targets for growth of about 5% this year, and officials will need to have steady confidence in the economy. New foreign direct investment into China in 2023 fell to its lowest level in 30 years, while the market collapse earlier this year highlighted the challenges facing the government. Unexpected early data releases are unlikely to be a substitute for meaningful changes in policy.
But Xiaojia Ji, chief China economist at Credit Agricole CIB, said the statements were a positive step as they signaled “further communication” from the government to guide market expectations.
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