What Caused ‘Black Monday’? The Answer’s Blocked in China.

On Aug. 24, following two months of extreme market volatility, the Shanghai Composite Index, China’s benchmark stock index, fell 8.5 percent, its biggest drop since 2007. The sell-off came on the heels of a spate of weak Chinese economic data and seemed to spark a global sell-off, with markets from Japan to Singapore to the United States dropping dramatically. But while English-language reports outside China largely attributed the global equities nosedive to jitters about the weakening Chinese economy and its wild market volatility — the Washington Post even dubbed it “China’s Black Monday” — Chinese state media characterized the dramatic global sell-off as a phenomenon of mysterious provenance with no relation to Chinese economic weakness.

On the evening of Aug. 24, the websites of state news agency Xinhua, state broadcaster China Central Television, and party mouthpiece People’s Daily featured a nostalgic account of President Xi Jinping’s 1998 visit to Tibet, stunning photos of preparations for an upcoming military parade, and even a takedown of Chinese tourists who buy expensive Japanese backpacks. But articles mentioning the stock market’s deepest plunge in eight years were tucked away obscurely on the websites — or even missing entirely. Similar information controls seemed to have been put into place on other major Chinese Internet platforms. On Aug. 24, searches on Chinese search giant Baidu for the term “stock market crash” yielded selective results, accompanied by the notification that “due to relevant policies and guidelines, some search results are not shown.” Searches for the same term on microblogging platform Weibo were also partially blocked.

Chinese media have seemed willing to comment on the Aug. 24 global market drop, but only in ways that conspicuously tiptoe around China’s own role in the mess. The relatively liberal Beijing News ran a single three-sentence article detailing the size of the domestic sell-off and stating simply that the “Shanghai Composite encountered Black Monday.” People’s Daily invoked similar language. One Aug. 24 headline read “Black Monday Befalls Asia-Pacific Markets.” The accompanying report presented the sudden sell-off as a mysterious phenomenon due, perhaps, to uncertainty surrounding U.S. interest rates, the Greek debt crisis, global weak economic growth, and fluctuations in the value of China’s currency, the renminbi. There was no mention of China’s wild market volatility over the past two months, or the fact that downward pressures on the global economy are due in large part to China’s slowing economy, which for two decades has been a major driver of global growth.

Eliding China’s role in the recent market swoon poses a tough feat for Chinese state media, which has had to resort to circular logic. In an Aug. 24 report, Xinhua noted the fall in U.S. equities — which began Monday trading only after Chinese markets had closed for the day — occurred because of “a global stock market drop” which “initiated market fears that the world economy is slowing more dramatically.”

One report on Chinese Internet portal Sina’s finance channel even placed the blame squarely on U.S. markets, writing that the drop in Asian markets and Taiwan had “been influenced by the Friday nosedive in U.S. stocks.”

Though most outlets echoed the state media line, there were a few exceptions. One Aug. 24 article on Hong Kong-based Phoenix Media’s finance channel seemed to harbor no qualms about pointing directly to China directly. “Because the Chinese stock market dropped 9 percent,” read the article’s sentence, “and the U.S. dollar and commodity prices also dropped, [global] investors have panicked.” And the state-run Reference News provided a brief summary of French, British, and U.S. news reports that pinned global stock woes on China’s weakness.

But the overall media narrative was hard to miss: Global market weakness was due to factors outside of China. The newfound silence about Chinese stocks is likely intended to curb domestic economic fears. China’s governing Communist Party has based much of its prestige and legitimacy on continued economic growth; weak economic performance could challenge party legitimacy as well as threaten social stability. That looked like a good bet for much of early 2015, when government-controlled Chinese media touted the country’s then-rising bull market. But the bubble started to burst in June. At first, Chinese media responded by widely promoting Chinese government efforts to stem the bleeding through increasingly dramatic market intervention. Now, those measures appear to be faltering. And the only option left is silence.

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