None of this has to do with a journalist in Beijing. Given that China has already arrested nearly 200 people for spreading online rumors about the stock market crash... don't look for them to face up to these uncomfortable truths any time soon.
Remember earlier this year when the FBI claimed to have found the man responsible for the 2010 Flash Crash...a day trader living in his parents' house in Hounslow? Well it seems the Chinese, too, can play the sacrificial scapegoat game as they announce the man who was responsible for the dramatic crash in the Shanghai Composite: Wang Xiaolu.
Never heard of him? That's because he's not a billionaire financier, a central banker, a political puppet or anyone else who could have actually set off the market carnage we've seen in recent weeks. He's a journalist for Caijing, a financial newspaper in China, and he was arrested last week for writing a “fake report” on the Chinese stock market in July that, as Beijing would have us believe, “caused panics and disorder at [sic] stock market, seriously undermined the market confidence, and inflicted huge losses on the country and investors.” That's a quote from the video confession that authorities managed to extract from him after his arrest and subsequently aired on national tv.
The “fake report” in question, the one that allegedly sent Chinese stocks tumbling and panicked markets worldwide, relayed the information that the China Securities Regulatory Commission was going to end their practice of artificially propping up the Chinese stock market. Although Caijing pulled the article from their site, the damage (according to Beijing) had already been done. Markets began tumbling in late July, and the rest is history.
Of course, that's like when NIST said that the World Trade Center started to fail and then “global collapse ensued” in their official investigation into the building “collapses” -- it tells us nothing and skips over the very part of the story they're supposed to be explaining, as if one journalist's report in a business newspaper was the difference between the Chinese stock market—and the Chinese economy itself—ticking along fine and that market falling off a cliff.
Because, let's be clear, what this recent market rollercoaster has made abundantly clear is that the Chinese export economy is contracting and global trade along with it. This was confirmed on Monday when China's official PMI figure came out at 49.7, a three year low, after a Caixin flash PMI of 47.1, a six and a half year low. Now the bad news is piling on, with Canada officially entering a recession after the second straight quarterly GDP drop and South Korean exports contracted an alarming 14.7% in August, three times worse than expected.
No, none of this has to do with a journalist in Beijing. But it makes a convenient excuse. Given that China has already arrested nearly 200 people for spreading “online rumors” about the stock market crash and the recent explosion at Tianjin, don't look for them to face up to these uncomfortable truths any time soon.