China accelerating secretive policies on financial, other data, spurred by Western acceptance, cooperation
China has been lying about its economic performance for years, but events have transpired in the last two years such that finally the mainstream media is paying attention, even if the corporate fools set up for failure in China aren’t yet.
New policies about what information can be released people outside the government is making it “harder for foreign companies and investors to get information, including about supplies and financial statements. Several providers of ship locations in Chinese waters stopped sharing information outside the country, making it hard to understand port activity there. Chinese authorities have restricted information on coal use, purged documents related to political dissent cases from an official judicial database, and shut down academic exchanges with other countries,” said the Wall Street Journal today.
The march towards secrecy began with the changes to the government that elected Communist Party Secretary Xi Jinping to the post for life in 2016, but even before then the government was not exactly transparent about its finances or other data it used to measure the performance of the government.
In 2016 the Japan Times lamented that truth telling and risk taking was rare in an economy that lacked managers who knew how to tell the truth, saying that only with more transparency can “China can complete its transition to a more market-oriented, innovation-driven economy — one that also supports stronger global growth.”
Today, it’s clear that even then China was lying, looking at transparency as a unfortunate corollary to financial markets, a weakness, not a benefit. And clearly China was not interested in the “transition to a more market-oriented, innovation-driven economy.”
Today, Chinese companies are now relying on a government red blanket to hide under so that even simple matters like turning over financial statements to foreigners for loan applications can be denied on the basis of state required secrecy.
What’s amazing is that Western companies, which would turn their noses at that type of secrecy in their own countries as possibly illegal, accept it as part of the price of life with China.
“Steve Dickinson, a lawyer at U.S. law firm Harris Bricken, recalled a recent episode in which a U.S. client had asked a Chinese company for audited financial statements to determine whether it was creditworthy. The latter declined, citing Chinese policy that states they can’t release financial statements to foreigners, he said,” according to the Wall Street Journal.
Yet still their Western partners acquiesced to the fraud.
“The client had to move forward with the partnership without the information, he said,” the WSJ added.