Chinese stocks are down 40 percent since June, and the government is rounding up journalists and financial executives who supposedly caused the market to dip.
Chinese authorities arrested nearly 200 people over the weekend for spreading information that allegedly instigated the market fluctuation. Xinhua, the state news agency, quoted the country's Ministry of Public Security as saying rumors "caused panic, misled the public and resulted in disorders in stock market or society." China has also suspended more than 65 social media accounts, and the government has promised to continue monitoring the internet to "enforce the rule of law and punish violations."
On Monday morning, state TV broadcast a "confession" from reporter Wang Xiaolu, who apologized for a story he wrote for the prestigious business publication Caijing in July about securities regulators.
"I shouldn't have published the report at such a sensitive time, especially when it could have great adverse impact on the market," a haggard looking Wang said. "I shouldn't have caused our country and shareholders such great losses just for the sake of sensationalism and eye-catchiness."
Xinhua also reported that Wang is being subjected to "criminal compulsory measures," and is suspected of "colluding with others and fabricating and spreading fake information on securities and futures market."
Wang's article said that the Chinese Securities Regulatory Commission planned to withdraw funds from the stock market. His report turned out to be untrue and was quickly debunked. The Commission later blamed Wang's story for a 23 percent decline in the market the following week.
Televised confessions like Wang's have recently become a mainstay of Chinese politics, with bloggers, academics, and journalists forced to admit wrongdoing on public TV. The confession also reflects a wider crackdown on voices that diverge from the state's version of events. In the wake of the Tianjin chemical explosion last month, China shut down more than 50 websites accused of spreading "rumors" about the incident.
"As well as ridiculous, the accusations against Wang are symptomatic of the Chinese government's desire to control media coverage of share price movements," Reporters Without Borders secretary-general Christophe Deloire said in a statement. "Suggesting that a business journalist was responsible for the spectacular fall in share prices is a denial of reality. Blaming the stock market crisis on a lone reporter is beyond absurd."
It's unlikely that Wang singlehandedly pushed Chinese stocks down, but he did violate government censorship guidelines for financial journalists. A leaked government propaganda directive from July made it clear that journalists should not even speculate about the future of China's economy: "Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market," it read. "Do not exaggerate panic or sadness. Do not use emotionally charged words such as slump, spike, or collapse."
Still, the recent crackdown does include some individuals with real financial power. Xinhua reported that four securities executives — Xu Gang, Liu Wei, Fang Qingli, and Chen Rongjie — have been charged with insider trading, taking bribes, and forging official seals.
Xu is one of China's most prominent businessmen, and is head of research for CITIC Securities, one of the country's largest investment banks.
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