Shortly after the Chinese New Year holiday in February, the People's Daily, the Communist Party's flagship newspaper, reported with a celebratory tone that domestic retail and restaurant spending during the festival had topped 1 trillion yuan ($145 billion) for the first time.

Against the backdrop of the trade war with the U.S., this result "defied doomsayers," the paper said, and continued a string of annual gains in consumer prowess that showed China's sustained economic strength.

Foreign media reports this year, however, have been portraying a starkly contrasting picture of Chinese economic slowdown as seen in declining gross domestic product growth rates, falling car sales and record low industrial output expansion.

The gap between these two images of China's economy is due to Beijing's extensive system of media censorship and controls, which has only tightened further in recent months.

In early May, Chinese media initially provided no coverage of the news that U.S. President Donald Trump had tweeted that he would soon raise import tariffs because China was "attempt[ing] to renegotiate" terms of its pending trade agreement with Washington. Censors deleted posts about the tweets from Chinese social media.

Yet even the vaunted Great Firewall of China could not seal off the nation entirely from word of the sudden reversal in momentum of the trade talks. The Shanghai stock market tumbled 5.6% that day, its worst showing in three years, as traders and investors around the country exchanged rumors about what Trump had said.

In Beijing's eyes, allowing the truth through might have made things even worse. Since the country embarked on its strategy of reform 40 years ago, the legitimacy of Communist Party rule has come to depend on an image of robust economic performance.

For the regime, news is propaganda and must serve the party's needs above all.

Chinese President Xi Jinping revealed his harsh stance on media freedom soon after coming to power in 2012. Negative news has been played down while positive official reports dominate coverage.

With strict censorship, the Chinese government hides from the eyes of the public the problems of labor-intensive manufacturers, exporters' scramble for cash, home price bubbles, debt-strapped local governments and other developments.

Censorship has recently tightened in areas beyond social problems and government policy to reach company and market news and even entertainment news.

Tight censorship of such reports impairs the ability of Chinese companies, investors and savers to make appropriate decisions. The shareholders kept in the dark about Trump's tweets in May lost money as their stocks fell under the pressure of rumors.

Tight censorship impairs the ability of Chinese investors to make appropriate decisions. © Reuters

While market regulators usually prohibit trading on selectively disclosed information, "insider trading" bans can hardly apply to tweets freely viewed by millions.

Chinese companies can be equally in the dark when making investments or extending credit if they are kept from knowing what is going on with their prospective business partners or the markets they operate in. Nor is China's growing middle class any better off when buying properties with their life savings.

Knowledge of the censorship would lead to skepticism over the positive image of China's economy constructed by state media outlets and government officials. The more the state interferes with media reporting on the economy, the less confidence the middle class will have in China's economy and politics.

Already, those Chinese with the means to do so have been moving money offshore and sometimes moving their family members too. That in turn chips away further at the authorities' information blockade.

When China is facing a fundamental challenge of sustaining economic growth, it is vital to have a media that is more than just a cheerleader offering "positive energy," to use Xi's favored slogan. Improving decision-making and the productivity of investments and business operations requires accurate, transparent information.

Knowing what is actually happening out in the world can help private companies and families make prudent decisions about their next moves and reduce their risks accordingly. Market forces cannot deliver for China in an information blackout.

Jingrong Tong is a senior lecturer in digital media and culture at Brunel University in London and the author of "Investigative Journalism, Environmental Problems and Modernization in China."