As China Evergrande Group is on the verge of collapse, videos of Protestant buyers have flooded social media. Government online bulletin boards are teeming with complaints and calls for action to save the huge real estate developer. The hashtag “What does Evergrande mean for the real estate market?” Has been viewed over 160 million times on a single platform.
But if problems threaten the Chinese economy, you wouldn’t know from reading the country’s front pages.
The name “Evergrande” has barely been mentioned by major public news outlets in recent weeks, even as the uncertain fate of the company has rocked global financial markets. Coverage of his recent troubles has been concentrated in a handful of trade publications.
It wasn’t until Friday that the country’s central bank commented on the company by name, more than a month after concern over its debt crisis began to light up the Chinese internet – and only to say the situation was under control.
The split screen reflects the fragile balance the ruling Communist Party seeks when it comes to the real estate giant, which has less than $ 300 billion in debt. On the one hand, the Evergrande crisis is too important to be completely removed. As concerns about the developer still spread, the Chinese housing market is collapsing, with potential ripple effects for the entire economy.
China announced on Monday that its third-quarter growth had slowed significantly, hit by problems in the real estate market, tight electricity supplies and other issues.
But authorities are also keen to avoid public panic, which could be triggered by too much publicity of Evergrande’s woes. Official silence could also send a message to spending corporate executives to face the consequences of their actions – a message in line with Beijing’s broader attempts to curb the private sector.
“Why should we tell you we’re going to get you out of this?” We couldn’t, âTing Shi, professor at the University of Hong Kong’s school of journalism, said of the government’s mindset. “We’re not going to show our cards now.”
So far, the approach seems to be working. While speculation about Evergrande’s fate has remained a popular topic on social media, the tenor of the discussions does not seem overly alarming, Professor Shi said. When US Secretary of State Antony J. Blinken urged China to act “responsibly” in managing Evergrande earlier this month, citing the potential global ramifications, many on Weibo joked that Mr. Blinken must have invested in the business.
The approach of the official media to Evergrande evolved as the crisis escalated.
This summer, before the developer’s troubles garnered so much attention, state media alerted to its practices. China’s Central Television, the public broadcaster, and the People’s Daily, the Communist Party’s main newspaper, published articles in August about central bank officials summoning Evergrande executives to discuss its debt. Chinese National Radio also reported the suspension of construction at some Evergrande sites, citing contractors who had not been paid.
But last month, what had been a somewhat niche concern exploded in the public eye, as rumors spread that Evergrande was on the verge of bankruptcy. Hundreds of investors, employees and salespeople in the company have gathered in cities across the country to demand their money. Images of the protests were widely shared on social media. Some users have made calls for others to join.
The fervor was so intense that Evergrande issued a statement accusing “sustained negative media coverage” of exacerbating its financial woes by driving out homebuyers.
Government censors began to intervene. Calls to protest have disappeared from social networks. Virtually no state media covered the protests. Some articles on the history of Evergrande’s risky lending practices, by independent financial agencies such as Caixin, have been censored on WeChat.
Global Times, a strongly nationalist tabloid, shared an article with the headline “Big Western Media Likes To Exaggerate Any Of China’s Smallest Problems In A Crisis.”
âNo, this country is not facing a ‘Lehman Brothers moment’,â the article said.
Yet the restrictions have been porous. Some photos of demonstrators occupying the Evergrande offices remain online; as well as hundreds of posts under the Weibo hashtag “The siege of Evergrande is under siege”.
Caixin’s article, although censored on WeChat, was still available on his website.
And on government comment forums, posters across the country asked when construction on apartments they had already paid for would resume.
Understanding the new Chinese economy
An economic overhaul. China is adopting new measures to change the way companies operate and limit the power of leaders. Driven by a desire for state control and autonomy, these changes mark the end of a golden age for private companies that have made the country a manufacturing power and a hub of innovation.
Grace Leung, an academic at the Chinese University of Hong Kong who has studied the Chinese media landscape, said allowing certain expressions of discontent could serve as a safety valve to prevent even larger protests if the crisis got out of hand. .
âIf you delete everything, all of a sudden if the business has a big problem, then people will have a hard time digesting it,â she said.
Indeed, the propaganda strategy appears to have shifted slightly further in recent weeks as public concern has remained high and the housing market has continued to suffer.
At the end of September, China’s central bank issued a statement promising to “safeguard the rights and legitimate interests of housing consumers,” without mentioning Evergrande. The People’s Daily immediately reported it.
Then on Friday central bank officials mentioned Evergrande by name for the first time. Zou Lan, the director of the financial markets department, told a press conference that the risks posed by Evergrande were “controllable” and that the overall real estate market was healthy. He promised that local governments would ensure the resumption of construction.
“The Evergrande group problem is an isolated phenomenon in the real estate industry,” Zou said, in remarks widely covered by state media. (In fact, other Chinese developers have reported financial issues.)
Central bank governor Yi Gang echoed the comments at a separate conference on Sunday. And on Monday, Fu Linghui, spokesperson for the National Bureau of Statistics, downplayed the real estate market’s impact on China’s economic slowdown.
But while officials at Evergrande were hoping for similar assurance, Zou offered none.
âIn recent years, the company has been poorly managed and has not been able to operate cautiously in the face of changing market conditions,â he said. “This caused a serious deterioration in its operational and financial indicators, and eventually risks erupted.”
Keith bradsher contributed reports. Joy Dong contributed research.