A spokeswoman for HSBC confirmed its exit to AFR Weekend and said the bank would refocus its marketing dollars towards other projects.

She denied there was anything more to it than the bank moving on after "five successful years".

Too risky

This would suggest other big foreign banks operating in China will jump at the chance to sponsor the survey and have their name splashed all over the media each month.

Not so, according to one person who was approached to take on the sponsorship.

While attracted by the branding opportunity his organisation declined as it was "too risky" in the current climate.

"If you are a sizeable bank that wants to do more business in China you don't want to make parts of the Chinese government angry," says the person who asked not to be named. "Sponsoring the survey is likely to affect your future business expansion in China."

The issue is that the HSBC/Markit PMI has been consistently weaker or more negative over the last year than the official PMI released by China's National Bureau of Statistics. In a country where the official narrative on everything from the economy to the weather is tightly controlled, this is a problem as it reinforces the view that China's official data can't be trusted.


Putting your name to such a high profile survey therefore makes you a target for China's regulators, according to the source.

"We don't want any extra attention," he says.

Leaking fears

A secondary issue is the risk the information may leak internally and be used by traders at the bank to profit.

After the Libor rigging scandals of recent years that would provide another nasty regulatory headache and potentially open the bank up to litigation and fines.

But the far bigger risk in taking on such a sponsorship is the Chinese government and its obsession with controlling information, particularly anything that might indicate the economy is weaker than the official data suggests.

Beijing already has a long track record of stopping such information being made public. According to one economist who tracks data releases closely, China's National Bureau of Statistics stopped publishing detailed break downs on the production of some building materials as the housing market started to sour last year.

This meant economists found it more difficult to cross check official statistics on property construction.


A similar tactic was used in the auto sector. When some began questioning official car sales figures by pointing to a drop in registrations, the government stopped reporting the latter. The lack of transparency on official statistics is paired with tight control of the local media.

On Tuesday when the Shanghai Composite Index was down 5 per cent at lunch time, Chinese propaganda authorities directed local journalists to minimise their coverage. If they did report on the dramatic morning session they should emphasis the "positive" aspects of the share market boom not dwell on the negatives, according to a message seen by the AFR Weekend.

Another issue is the collection of what is often deemed sensitive information in China. This is a very large grey area and has seen the likes of BHP Billiton put strong internal controls in place when it sends research teams into the field in China. So worried is the big miner about being accused of stealing state secrets that it aggregates statistics from regions rather than individual areas, so as to not be seen as monitoring individual steel plants or iron ore mines.

This is the environment facing Markit as it prepares to announce a new sponsor for its China PMI and others in the region. Richard Willis, a director of Markit, says the new partner would be announced shortly.

"It's a blue chip name …. but no its' not a bank," he said via phone from London. "Times have changed and banks are certainly more risk averse these days."

The new sponsorship deal ensures the China PMI will survive as a closely watched, but more importantly, independent data point for those trying to make sense of the world's second biggest economy.

