China detained a financial reporter on Tuesday, accusing him of “fabricating and spreading false information about securities and futures tradings” as authorities tighten control over media reports on market volatility.
Wang Xiaolu of the Caijing Magazine was among 11 people asked to assist police investigations as the Shanghai Composite Index lost 16 percent of its value in three days this week.
Others detained on Tuesday include eight traders from CITIC Securities as well as a current employee and a former employee of market regulator China Securities Regulatory Commission (CSRC), according to Xinhua news agency.
Wang’s detention has been linked to his work in a July 20 report entitled “CSRC studies proposals to withdraw stability-maintaining funds.”
China pumped tens of billions of yuan into the market last month via the China Securities Finance Corp (CSFC) when Shanghai and Shenzhen stocks tanked. The same kind of “stability maintenance” action was not seen during the dramatic market losses that unfolded last week, spurring talk about the funds being withdrawn.
Wang said in his report that authorities were considering three ways for brokerage firms, who contributed to the CSFC’s market saving funds, to get their money back.
The CSRC was quick to rebut Wang’s article. Spokesman Zhang Xiaojun called the magazine “irresponsible” hours after the report was published.
In a statement on Wednesday, Caijing Magazine said it was asked to hand in a “written explanation” on Wang’s report.
China media expert David Bandurski told HKFP that authorities are strengthening their control over the media and online discussion after a rare moment of media openness in the aftermath of the Tianjin chemical explosions.
“Because the media really broke through on Tianjin, they are going to want to make sure it doesn’t happen again. And they are also going to reassess control on Wechat and other social media platforms,” said Bandurski, a research associate for the China Media Project at the University of Hong Kong.
State media has been staying quiet on stock market woes this week. The benchmark Shanghai Composite Index suffered the biggest one-day percentage fall in eight years on Monday. The next day, there was no mention of market collapse in the print edition of People’s Daily, as the New York Times reports.
Meanwhile, China Digital Times reported that media outlets have been told to delete reports about the market fall.
This shows the Chinese leadership is “extremely sensitive” about stock market stories, according to Bandurski.
“They don’t want people talking about it. And their first impulse is going to be prohibit any form of in-depth coverage… They (financial journalists) only have to go back in the spring and look at the way the state media pushed this whole bubble to see the leadership bears a great deal of responsibility.”
The Shanghai market closed at 2,927.29 points on Wednesday, 16.6% lower than Monday’s market opening of 3,507.74.