China Evergrande Gets Soft Treatment in Chinese Media

With the China Evergrande Group on the brink of collapse, videos of home buyers protesting have flooded social media. Online government news forums are teeming with complaints and requests for intervention to save the giant property developer. The hashtag “What does Evergrande mean for the real estate market?” Has been viewed more than 160 million times on a platform.

But when trouble threatens China’s economy, reading the country’s front pages would not tell you.

The name “Evergrande” has barely been mentioned by top government news agencies in recent weeks, despite the uncertain fate of the company rocking global financial markets. Coverage of the recent problems has been concentrated in a handful of business publications.

It wasn’t until Friday that the country’s central bank gave a name to the company, more than a month after fears of the debt crisis lit the Chinese internet – and then only to say the situation was under control.

The split screen reflects the weak balance the ruling Communist Party is striving for with the real estate giant suffering from $ 300 billion in debt. On the one hand, the Evergrande crisis is too great to be completely suppressed. With developer worries still spreading, China’s housing market collapses, with possible repercussions for the entire economy.

On Monday, China reported that its growth slowed significantly in the third quarter due to problems in the real estate market, a power shortage and other issues.

But the authorities are also keen to stave off public panic that too much publicity about Evergrande’s suffering could spark. The official silence could also send a message to wasteful corporate executives facing the consequences of their actions – a message in line with Beijing’s wider attempts to contain the private sector.

“Why should we tell you that we are going to release you? Maybe not, ”said Ting Shi, professor at the University of Hong Kong Journalism School, of the government’s mentality. “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 doesn’t seem unduly troubled, Professor Shi said. When US Secretary of State Antony J. Blinken urged China to “act responsibly” in the administration of Evergrande earlier this month, citing the potential global impact, many on Weibo joked that Blinken must have invested in the company.

The way the official media dealt with Evergrande has evolved as the crisis has blown.

This summer, before the developer’s problems had attracted so much attention, state media sounded the alarm about his practices. China Central Television, the state broadcaster, and People’s Daily, the Communist Party’s main newspaper, published articles in August about central bank officials summoning Evergrande executives to discuss the debt. China National Radio also reported suspended construction at certain locations in Evergrande, citing unpaid contractors.

But a niche public issue exploded last month when rumors spread that Evergrande was on the verge of bankruptcy. Hundreds of the company’s investors, employees, and vendors gathered in cities across the country to ask for their money back. Images of the protests were widely shared on social media. Some users made calls for others to join.

The fervor was so intense that Evergrande issued a statement accusing “continued negative media coverage” of worsening his financial problems by driving homebuyers away.

Government censors intervened. Calls for demonstrations disappeared from social media. Virtually no state media reported the protests. Some articles on Evergrande’s history of risky lending practices by independent financial institutions like Caixin have been censored on WeChat.

Global Times, a garish nationalist tabloid, shared an article titled “Western mainstream media likes to exaggerate any of China’s smallest problems into crisis.”

“No, there is no ‘Lehman Brothers moment’ in store for this country,” says the article.

Still, the restrictions were porous. Some photos of protesters occupying Evergrande offices remain online; including hundreds of posts under the Weibo hashtag “Evergrande headquarters is under siege”.

Caixin’s article, although censored on WeChat, was still available on his website.

And on government commentary forums, posters across the country have asked when construction of homes they have already paid for will resume.

Understand China’s New Economy

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An economic transformation. China is taking new measures to change the way businesses work and limit the power of executives. Driven by the desire for state control and independence, these changes mark the end of a golden age for private companies that has turned the country into a manufacturing center and a hub for innovation.

China’s head of state Xi Jinping is reshaping China’s business world in his own image. Above all, that means control. Where executives once had the green light to grow at any cost, officials now want to dictate which industries are booming, which are going bust, and how it happens.

Many measures have already been implemented. The Chinese government has tightened supervision of the country’s Internet Goliaths, declared all financial transactions involving cryptocurrencies to be illegal and arrested top managers from troubled companies. Meanwhile, China’s biggest developer Evergrande is wavering without speaking of a bailout from officials.

What China does next will matter. If Chinese officials rescue Evergrande, they risk sending a message that some companies are still too big to fail. Otherwise, up to 1.6 million home buyers waiting for unfinished homes and hundreds of small businesses, creditors and banks could lose their money.

The long-term outlook is unclear. Some analysts say Mr. Xi’s actions and attempt to contain excess credit have already made a huge difference. But the world’s # 2 economy is slowing down, and the Chinese government may have to work harder to revive it.

Grace Leung, a scholar at the Chinese University of Hong Kong who has studied China’s media landscape, said allowing some expressions of discontent could serve as a kind of safety valve to prevent even bigger protests if the crisis gets out of hand.

“If you put it all down, when the company suddenly has a big problem, people will have a hard time digesting it,” she said.

In fact, the propaganda strategy seems to have shifted slightly again in recent weeks, as public concern remains high and the housing market continues to suffer.

At the end of September, China’s central bank issued a statement promising to “protect the legitimate rights and interests of home consumers,” without mentioning Evergrande. People’s Daily reported it immediately.

Then, on Friday, central bank officials mentioned Evergrande by name for the first time. Zou Lan, director of the financial markets division, said at a press conference that Evergrande’s risks are “manageable” and that the property market is healthy overall. He promised that the local government would ensure that construction work resumed.

“The Evergrande Group problem is an isolated phenomenon in the real estate industry,” said Mr. Zou in a comment extensively covered by state media. (In fact, other Chinese developers have reported financial problems.)

Central Bank Governor Yi Gang repeated these comments at a separate conference on Sunday. And on Monday, Fu Linghui, a spokesman for the National Bureau of Statistics, downplayed the real estate market’s impact on China’s economic downturn.

But when Evergrande officials hoped for similar reassurance, Mr. Zou didn’t offer one.

“In recent years the company has been poorly managed and has been unable to act prudently in response to changing market conditions,” he said. “This has resulted in a serious deterioration in operational and financial metrics, and eventually risks have erupted.”

Keith Bradsher contributed to the coverage. Joy Dong contributed to the research.