The problem with media’s coverage of the Chinese stock market crash
The Chinese stock market crash over the summer was big financial news, but its severe impact on Chinese families was largely overlooked by Western news.
The crash began as an investment bubble. Large numbers of Chinese small business owners put their business onto the stock market, creating a glut of investment options, according to a Reuters article from July 8. When many small businesses didn’t perform well, the value of their stocks decreased, making the market much more volatile, The Guardian reported.
On June 12, the bubble burst. On the Shanghai Stock Exchange, a third of the value of A-shares was lost, meaning the best shares of China’s most profitable companies lost a significant amount of value. In one day, China lost the equivalent of about $2.7 trillion, or six times Greece’s entire foreign debt, according to a New York Times’ story from July 6.
The impact of the crash reached the United States, where the Dow Jones Industrial Average dropped 1000 points, which The Guardian reported represented the largest single-day decrease in average stock value in its history.
Luckily for foreign investors, the impacts of the crash did not do a massive amount of damage outside of China, according to The Guardian and Fortune Magazine. China’s overall growth is still 50 percent greater than last year, Fortune Magazine wrote, so there seems to be no permanent damage for foreign investors big and small.
Seems like a straightforward story, right? The Chinese government’s attempt to mitigate the crash were doomed to fail, but luckily foreign businesses should be able to recover from these losses.
But what about the Chinese people? Small retail investors constitute 80 percent of the Chinese stock market, according to The Guardian. Some of these people had put their family’s life savings into the stock market, encouraged by state-sponsored media’s calls for citizens to invest more.
Most international and financial news outlets either gave only passing mention to this statistic or ignored it altogether. Foreign investments make up only 2 percent of the Chinese stock market, a story in the International Business Times from Aug. 25 reported.
Instead, in an article about the crash, The Guardian included a quote from Nick Dixon, an investment director at the asset management company Aegon UK, who said: “If pension savers don’t need to access their fund for many years, they needn’t be alarmed by short term volatility.”
Dixon was referring to foreign investors, but the article does not mention the impact of the crash on Chinese investors, who will be hit harder by the market’s volatility.
Fortune also published an opinion piece by guest commentators Chen Baizhu and Imaad Zuberi in which they argued the stock market crash and reduced annual growth does not represent significant damage to China’s economy. However, the article completely ignores the situations of individual Chinese investors. To Fortune, the crash was “just the beginning of a new chapter of this great story.”
Similarly, NPR framed their coverage of the crash as a story of numbers and lost profits, not lost savings. Their main source, a Chinese man surnamed Lee, said, “I got in late last year when the market was still good. … What I’ve lost is mostly just profit, not my initial investment.”
The Chinese government also arrested almost 200 people accused of spreading rumors about the crash, Al Jazeera reported on Aug. 31. Bloomberg Business News reported on Aug. 3 the government also froze 38 accounts suspected of short-selling, a technique in which one bets that a certain stock will fall in value, buys the stock, and then sells it to drop its value, thus profiting off of stock market sabotage.
Many financial news outlets, such as Fortune, would, at best, mention this only as a brief anecdote. If Western media fails to thoroughly cover the arrests of journalists and investors, it sends a message that the arrests are an acceptable part of the Chinese government’s standard economic policy.
Luckily, some coverage of the crash has included interviews with individual Chinese people who were hit hard by the collapse of the market.
The New York Times published an article, “China’s Market Rout is a Double Threat,” in which He Wuhong, a Chinese middle school teacher and mother of a toddler, is given a voice.
“My heart can’t take it,” she said. “We would probably sell off our holdings as soon as the market rebounds enough to make us even.”
The authors, Keith Bradsher and Chris Buckley, explain her family’s financial situation and their lack of flexibility, analysis that is left out in other articles by mainstream media. Their analysis acknowledged the misfortune of small business owners and individual investors will be long term writing, “The problem for millions of investors is that share prices may not recover for years, if ever, for the more speculative stocks.”
Unfortunately, The New York Times’ one article did not counter the majority of the coverage, which stopped at discussing stock numbers and never went into analyzing the economic fallout of such widespread debt among consumers in the fastest growing economy in the world.
The expected retort would be that not every U.S. newspaper needs to explain the plight of Chinese individuals and families because the focus of their writing is on the U.S. economy and the interests of their audience, who are most likely not Chinese. If the U.S. is not damaged by events in China, no matter how dramatic, there is no reason for Western media to care.
However, this way of thinking prevents readers from thinking about China as anything other than a mysterious country with an enigmatic leadership. Chinese people remain a monolith to us. If the news media only portrays Chinese news in relation to stocks and businesses, the majority of Americans will continue to view the complex society of the People’s Republic of China as nothing more than an occasional headline in the business section.
Moreover, there is indeed a practical reason for caring about the stories of Chinese families. Financial hardship for Chinese people will have noticeable effects on consumption around the world. If Chinese families lost their savings, they may be less willing to purchase expensive goods, which could hinder U.S. exports and Chinese domestic consumption. Severe debt may also dissuade Chinese families from taking out loans in the future, potentially weakening China’s banking system in a long-term scope.
As much as one can express interest in China’s economy and society, if that interest ends with the business talk, one is simply considering China to be market for goods, not a rich society with more than a billion individuals whose lives should matter when we cover and discuss international economics.
If relations between the U.S. and China are to remain at least benign — let alone improve and become more open — we in the U.S. must make an effort to see Chinese people as individuals with whom we can sympathize, even and especially when we are not directly affected. Our understanding of each other’s economy, society and daily lives must evolve from tropes of paper dragons and monolithic systems into a desire to improve each other’s lives through commerce and empathy.
This stock market crash was an ideal time for Western media to express sympathies for Chinese people who lost their savings and were plunged into debt. Some publications, such as The New York Times, explored the human cost of the crash, including lost savings and arrests. The primary narrative produced by Western news, however, preferred to focus on only the cold numbers of whether the West would feel repercussions and once assured American investors would not lose money, skipped over the tremendous losses in personal livelihood of millions of people.
Michael Tkaczevski is a senior journalism major who cringes every time Donald Trump says China. You can email him at [email protected].