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China "Punishes" Hundreds For "Maliciously" Manipulating The Market

Tyler Durden's picture




 

The deadly chemical blast in the Chinese port of Tianjin was a preventable catastrophe in which more than 100 people lost their lives thanks in part to what looks like the political connections of the warehouse’s owners and although an upfront, transparent investigation and honest assessment of the environmental impact is likely the only way to safeguard the public and ensure it doesn’t happen again, no one believes the Chinese government has the will to conduct such an investigation. 

But whatever you do, do not say any of the above if you live in China.

Similarly, China’s stock market collapse was an entirely preventable financial catastrophe caused by the unchecked accumulation of margin debt and the encouragement of speculation, and the bursting of the equity bubble which began in June has been nothing short of a debacle that’s led to international condemnation and accusations that, even in a centrally planned world, Beijing’s particular brand of intervention is so egregious as to stray outside the bounds of manipulated market decorum. 

But if you live in China, don’t say that either. 

Over the last two months there were signs that Beijing would soon resort to outright, sweeping censorship as it relates to both the stock market and the Tianjin blast. For instance, in July, phrases like "rescue the market" were reportedly banned and in the wake of the Tianjin disaster, hundreds of social media accounts were shut down for spreading "blast rumors."

Now, ahead of a military parade that Xi Jinping will allegedly use to show the world that the Chinese lion "has woken up" (albeit with the amusing caveat that the lion is "peaceful, pleasant and civilized"), the Politburo apparently has seen just about enough criticism for its handling of the stock market collapse and the Tianjin blasts and as WSJ reports, more than 200 people have now been "punished" for their alleged role in "mislead[ing] society and the public, generat[ing] and spread[ing] fearful sentiment, and even us[ing] the opportunity to maliciously concoct rumors to attack [the] Party and national leaders." Here’s more:

The sweep targeted people who the government said spread false Internet rumors regarding events such as the stock-market turmoil and deadly explosions earlier this month in the port city of Tianjin, the Ministry of Public Security said Sunday.

 

The government is facing intense public scrutiny in China over its management of the slowing economy and turbulent markets, as well as public anger over the blasts at a hazardous-chemical warehouse in Tianjin.

 

In its statement, the public-security ministry didn’t identify most of the 197 alleged offenders, giving only surnames for some of them. The statement quoted four people, identified only by their surnames, as expressing regret for spreading false information. It didn’t elaborate further on individual offenses and punishment, except to note that 165 online websites and accounts were shut down.

 

Statements described by the ministry as false included rumors that a man jumped to his death in Beijing because of the stock market slump, claims that at least 1,300 people were killed in the Tianjin blasts, and inflammatory rumors related to China’s commemorations of the 70th anniversary of victory in World War II.

 

Sunday’s statement came just weeks after the Cyberspace Administration of China said it shut down 18 websites permanently and suspended another 32 websites for a month for allegedly publishing unverified information or letting users spread groundless gossip related to the Aug. 12 explosions in Tianjin, which killed at least 150 people and injured more than 700.

China has also officially confirmed what multiple news outlets reported late last week. Namely that a journalist at Caixin and a prominent investment banker had been detained in connection with spreading "rumors" and "illegal trading."From WSJ again:

In the case of Mr. Wang, the Caijing reporter, Xinhua said an alleged fabrication was a July 20 report saying the China Securities Regulatory Commission was studying a withdrawal of government funds used to stabilize the domestic stock market amid a broad-based slump. 

 

Mr. Wang told investigators he wrote the report by combining market-related information with his own “subjective assessment.” More specifically, Wang says he “obtained the information [about the possible scaling back of CSF’s plunge protection buying] through the abnormal channel of gleaning, in private, information about the market.  I shouldn’t have released a report with a major negative impact on the market at such a sensitive time. I shouldn’t do that just to catch attention which has caused the country and its investors such a big loss. I regret . . . [it and am] willing to confess my crime.”   

So essentially, Wang’s criminal behavior amounted to reading publicly available information in "private" (which we presume means "at his desk"), drawing conclusions, and writing a story, which is of course contrary to the tried and true method of journalism in China wherein Beijing sends journalists a dispatch telling them what to say and then journalists just regurgitate it. 

As for Xu Gang, the CITIC executive, he has now apparently given a detailed account of his misdeeds, as has CSRC official Liu Shufan who apparently "told investigators that he took bribes from an executive of a listed company to help that firm pass regulatory scrutiny, engaged in insider trading and made use of forged documentation to help a lover purchase an apartment in Shanghai."

Meanwhile, China has also brought in Li Yifei, chairwoman of Man Group’s China arm. From Bloomberg

Chinese authorities took Li Yifei, chairwoman of Man Group Plc’s China unit, into custody to assist with a police probe into market volatility, according to a person familiar with the matter.

 

Li assisting with the investigation doesn’t mean she is facing charges or has done anything wrong. She has led Man Group in China since November 2011, according to her profile on LinkedIn. The person asked not to be identified because the probe isn’t public.

We suspect maybe this was the mistake: 

In an interview with Bloomberg Television’s Stephen Engle in November, Li said investors and regulators in China were beginning to understand hedge funds.

 

"The Chinese investors and regulators are beginning to understand that actually hedge fund is about hedging."

Yes, "actually hedge fund is about hedging," which, as Citadel learned earlier this month, would "actually" be fine as long as by "hedging" Li means "buying" or any other activity which leads equities higher. Always higher. Never, ever lower.

In any event, the Politburo has now abandoned all prestense of capital market liberalization and/or providing for an environment that's conducive to any semblance of freedom of speech. This is of course predictable. It's rather easy to claim that reforms are being implemented at a rapid clip both in terms of financial markets and in terms of society when everything is going well. But free markets can be painful when the invisible hand purges misallocated capital and freedom of the press can be equally painful when journalists unconstrained by censorship purge bullshit.

Of course journalists face plenty of censorship even in the US, which is supposed to be the bastion of press freedom (just ask Pedro da Costa) and capital markets are everywhere and always manipulated by central planners.

And that is perhaps the lesson Xi Jinping has yet to learn. That is, we all exist in a censorsed and manipulated world; the Politburo just hasn't figured out how to be subtle about it yet.


 

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Mon, 08/31/2015 - 07:47 | 6489515 JustObserving
JustObserving's picture

WSJ reports, more than 200 people have now been "punished" for their alleged role in "mislead[ing] society and the public

I hope Citadel is on the list of those who were punished.  Perhaps, their new 7 figure employee who recommended shorting the Chinese market is on the list of offenders

Chinese Officials Flipping Out Over Bernanke Advice to Hedge Fund to Sell Short China

http://www.economicpolicyjournal.com/2015/08/chinese-officials-flipping-...

Mon, 08/31/2015 - 07:51 | 6489532 VinceFostersGhost
VinceFostersGhost's picture

 

 

 

Seems kinda like Obamacare.

Mon, 08/31/2015 - 07:55 | 6489543 Four chan
Four chan's picture

manipulating = selling

Mon, 08/31/2015 - 08:00 | 6489552 VinceFostersGhost
VinceFostersGhost's picture

 

 

They need to be rounded up and taught to think correcty.....you koow....,politically.

 

 

Mon, 08/31/2015 - 08:06 | 6489563 johnnymustardseed
johnnymustardseed's picture

Welcome to Capitalism

Mon, 08/31/2015 - 08:15 | 6489588 Dutti
Dutti's picture

"The Chinese investors and regulators are beginning to understand that actually hedge fund is about hedging."

Looks like disinformation to me. no sarc.

Mon, 08/31/2015 - 07:53 | 6489539 CrazyCooter
CrazyCooter's picture

That is 200 more than the US, and we had an 7 year head start!

Regards,

Cooter

Mon, 08/31/2015 - 08:10 | 6489573 JJdog
JJdog's picture

everything is backwards in China! The US awards manipulators, scams and finanical criminals 

Mon, 08/31/2015 - 07:45 | 6489521 buzzsaw99
buzzsaw99's picture

round up the usual suspects [/captain renault]

Mon, 08/31/2015 - 07:52 | 6489535 StychoKiller
StychoKiller's picture

Next up, start the show trials, the Honorable Judge Kangaru presiding...

Mon, 08/31/2015 - 07:58 | 6489550 MarkAntony
MarkAntony's picture

Let freedom reign...    market only go up, market go down-we cut off you pipi.

Mon, 08/31/2015 - 08:25 | 6489615 1033eruth
1033eruth's picture

and feed it to the goats.

Mon, 08/31/2015 - 09:56 | 6489905 Joe Mama 3
Joe Mama 3's picture

Funniest shit I seen here in a while !!!!!!!!!!!!!!

Mon, 08/31/2015 - 08:01 | 6489551 junction
junction's picture

If the Trans Pacific Partnership gets passed, the United States will officially have press censorship similar to China's when reporting bad corporate news.  The only difference is that the TPP will enforce censorhip through the use of heavy civil fines.  Of course, there will be no change in the current American policy on reporters having information linking Obama, Bush and Clinton to FBI death squads, massive CIA drug smuggling and treason.  As always, reporters and their sources with such information will be found dead from suicide, car accidents or air crashes.

Mon, 08/31/2015 - 10:09 | 6489959 Element
Element's picture

That's just a small part of it, read this:

http://www.independent.co.uk/news/uk/politics/david-cameron-extremism-sp...

That's what the data logging of 100% Internet traffic is all about. Each of the five-eyes states are going to do what Cameron is saying there, starting in the next month or so. They have been planning and putting the parts and tech in place, for years now, and finally it's ready for global prime-time operation.

In the 1990s this concept was called, "Total Information Dominance".

That's what they've built.

Mon, 08/31/2015 - 07:47 | 6489525 BizDuck
BizDuck's picture

These types of actions by China insure that they will NEVER be the world's reserve currency

Mon, 08/31/2015 - 08:11 | 6489578 NoDebt
NoDebt's picture

There is a fair bit of debate over whether they even WANT to have Reserve Currency status.

Mon, 08/31/2015 - 08:28 | 6489623 1033eruth
1033eruth's picture

They don't have to be.  Any nation with reserve currency, just abuses the privilege anyway.  Note China's trade balance with us?  and many other nations?  As long as we and others are sending them our wealth, why do you think reserve currency is such a special honor?  

Mon, 08/31/2015 - 09:16 | 6489757 g speed
g speed's picture

what exactly is china's trade balance with the USA and how did you arrive at those precise and uncorrupted figures ??   hummmm??

Mon, 08/31/2015 - 07:47 | 6489526 blindman
blindman's picture

Circling the toilet, or light at the end of tunnel?
Posted on August 30, 2015 by The Doc
http://www.silverdoctors.com/circling-the-toilet-or-light-at-the-end-of-...
.
.."I am dead serious. I am not panicking or trying to fear-monger. But I can imagine that many of you will be downright pissed at me if I had NOT warned of the possibilities, even if only one third of this comes to pass. “Why didn’t you f-ing* say something!”

I’d rather you think me crazy if, somehow, this broken system manages to survive. According to Strauss & Howe, it would be a “first” in 400 years."
.... Submitted by Dr. Jerome, TFMetals Report:

Mon, 08/31/2015 - 07:48 | 6489527 overmedicatedun...
overmedicatedundersexed's picture

now i know why jews stay outta china..bernake has made a mistake.

Mon, 08/31/2015 - 08:07 | 6489566 turtle
Mon, 08/31/2015 - 08:11 | 6489574 overmedicatedun...
overmedicatedundersexed's picture

turtle your tin foil hat is too tight,.however they are a crafty bunch..who knows?

Mon, 08/31/2015 - 08:48 | 6489645 MSimon
MSimon's picture

HSBC was at one time a CIA proprietary. Money laundering for Hmong opium before Afghanistan got the trade.

Mon, 08/31/2015 - 08:33 | 6489603 turtle
turtle's picture

whatever... yeah, no jews in China... no commies there either...

https://www.corbettreport.com/china-and-the-new-world-order-video/

 

Mon, 08/31/2015 - 08:52 | 6489687 BurningBetty
BurningBetty's picture

We're being ping-ponged :-(

Mon, 08/31/2015 - 07:50 | 6489529 OldPhart
OldPhart's picture

Fuck!  Getting Colonospocpsy on Tuesday...just took two dulcolax..per instructions...why do I have the feeling I'm going to be fucked tomorrow and raped Tuesday?

Mon, 08/31/2015 - 08:13 | 6489581 NoDebt
NoDebt's picture

You really haven't lived until you've have your first colonoscopy.  Good luck.  Normally I would say "have fun" but you won't.  Trust me.

Mon, 08/31/2015 - 09:03 | 6489724 RaceToTheBottom
RaceToTheBottom's picture

Prepare for liftoff!!!!

Mon, 08/31/2015 - 07:54 | 6489531 Arnold
Arnold's picture

Sounds like the same tannoy announcement we've got playing here.

 

 

Hold! Hold! Hold!

(really meaning hold untill we abandon ship)

Mon, 08/31/2015 - 07:51 | 6489533 Bill of Rights
Bill of Rights's picture

Obama and the other Marxist jump up and down " why can't we do that "

Mon, 08/31/2015 - 07:51 | 6489534 Panic Mode
Panic Mode's picture

The Tianjin blast is caused by outright corruption, just how deep the chain is.

Mon, 08/31/2015 - 15:51 | 6491634 bid the soldier...
bid the soldiers shoot's picture

I suppose sabotage can be called outright corruption.

Mon, 08/31/2015 - 07:53 | 6489537 cornflakesdisease
cornflakesdisease's picture

And this is yet another reason why China's currency is what it is.  This is why they will not get a seat in the IMF, their currency will not be of any consequence, etc etc.  Sorry, Dollar, Inc and the Boys have their foot on the throat of the world.

We'll see how Russia & Iran fare at $35 oil for the next four years.

Mon, 08/31/2015 - 08:01 | 6489555 Winston Churchill
Winston Churchill's picture

Bill Holter has a theory that China had a failure to deliver phyz gold at the same time as

the SDR rejection.Would explain a lot of whats been happening for the last three weeks.

SGE figure suggest the same.

Were those the last words of the arrested ?

Mon, 08/31/2015 - 07:53 | 6489538 Debugas
Debugas's picture

they made a mistake earlier when they allowed trading on margin

Mon, 08/31/2015 - 08:00 | 6489544 falak pema
falak pema's picture

Usual suspects, round them up.

If you put the Brezhnevian picture on the face of China's boss get ready for an Afghan type military diversion!

Now DAT would please the HELL out of the US MIC : If ONLY CHINA is tempted to solve its economic woes by militarist sabre rattling and an adventurous stance! We are saved! Shades of Soviet Afghan!

Well if that happens we will know ONCE again History rhymes!

There is a fine line in an autocracy between fighting endemic regional corruption and becoming irretrievably corrupt oneself; the one inevitably leads to the other if autocratic power has no checks and balances.

 

Mon, 08/31/2015 - 08:04 | 6489559 Wild Theories
Wild Theories's picture

Now I understand why a particular Tyler or two are particularly angry at China

 

"Statements described by the ministry as false included rumors that a man jumped to his death in Beijing because of the stock market slump, claims that at least 1,300 people were killed in the Tianjin blasts,"

Mon, 08/31/2015 - 08:11 | 6489575 Niall Of The Ni...
Niall Of The Nine Hostages's picture

To the degree QE stimulated any economy, it was China's. If Chinese intelligence have a moment, could they pick up Bernanke too?

Mon, 08/31/2015 - 08:13 | 6489582 Tjeff1
Tjeff1's picture

I am convinced the Obama administration would do the same thing if/when the US markets drop like China's. 

 

They think they are omnipotent.

Mon, 08/31/2015 - 08:13 | 6489584 2muchtax
2muchtax's picture

Using my communism to democracy translator:
Malicious seller = evil speculators

Mon, 08/31/2015 - 08:17 | 6489591 Tinky
Tinky's picture

Not a good time to be travelling to China on a passport from Mauritius.

Mon, 08/31/2015 - 08:21 | 6489606 2muchtax
2muchtax's picture

I get a good laugh when I hear how successful China has been embracing capitalism...same when I hear about capitalism in the USSA

Mon, 08/31/2015 - 08:27 | 6489620 MSimon
MSimon's picture

claims that at least 1,300 people were killed in the Tianjin blasts,

 

So it was double that?

Mon, 08/31/2015 - 08:28 | 6489621 Lanka
Lanka's picture

Any reports of fatal accidents with a nail gun?

Mon, 08/31/2015 - 08:30 | 6489627 AbbeBrel
AbbeBrel's picture

There is a big disconnect between Wall Street trading and China trading. The Chinese seem to want to be in control, while saving face. The Wall Street traders also want to be in control, while ripping your face OFF.

Somehow the Wall Street traders get to the core of "trading" and the embrace of chaos, more than the Chinese.

Somehow the 5 million new Chinese "traders" who signed up in 2015 will have to learn that markets are more the wild and wicked Wall Street type, than something that can be domesticated by use of heavy handed state propaganda.

Mon, 08/31/2015 - 08:35 | 6489638 fromthinair
fromthinair's picture

I am not sure what was the additional information in this post, but good post though. If you are in China then be careful about conducting "subjective evaluation" of market data. In fact, it can land you in different sorts of trouble in any country. 

Mon, 08/31/2015 - 08:40 | 6489651 no1ninja
no1ninja's picture

How dare you sell!!!!   You should only buy!    - China

Mon, 08/31/2015 - 08:49 | 6489682 BurningBetty
BurningBetty's picture

"China's Ministry of Public Security says the accused are very, very sorry for their actions, in which they "misled society and the public, generated and spread fearful sentiment, and even used the opportunity to maliciously concoct rumors to attack [Communist] Party and national leaders."

Can I laugh now????

HAHAHAHAHAHAHAHAHAHA!!! They actually went publicly...hahahahahaha. Hilarious.

Mon, 08/31/2015 - 09:01 | 6489721 bahaar
bahaar's picture

Manipulation with Chinese characterstics is just more scary than manipulation with American characterstics.

Mon, 08/31/2015 - 09:17 | 6489756 Raging Debate
Raging Debate's picture

The first words in human history spoken by Neanderthal chief with big stick: "It is all your fault the tribe is hungry."  WHACK!!!

Chief then goes into private cave where lots of buffalo steaks and hides abound.

Mon, 08/31/2015 - 09:24 | 6489781 Lordflin
Lordflin's picture

They do the same thing here... folks just get to sound off about it... doesn't really change anything... provides some comedy for the criminal thugs who have usurped power.

Oh... and we have guns...

Mon, 08/31/2015 - 09:28 | 6489804 Lordflin
Lordflin's picture

We have guns, as the police are starting to discover. And I am by no means codoning the killing of police, or anyone else. My point is that pushing people past their limits in a nation where there are more guns than civilians carries concomitant risks...

Mon, 08/31/2015 - 09:38 | 6489842 Spungo
Spungo's picture

Bernanke telling people to short China is everything you need to know. Bernanke is not stupid. This shows that he completely understands the nature of the bubbles he helps create. Don't be shocked when he makes millions by shorting the S&P at some point.

Mon, 08/31/2015 - 09:58 | 6489915 Element
Element's picture

 

 

And that is perhaps the lesson Xi Jinping has yet to learn. That is, we all exist in a censorsed and manipulated world; the Politburo just hasn't figured out how to be subtle about it yet.

 

Bunch of pikers. Our Orwellian nightmare is far better than their Orwellian nightmare.

Mon, 08/31/2015 - 10:13 | 6489985 DaNuts
DaNuts's picture

Chinese markets drop, so does the queue for kidney transplants.

Mon, 08/31/2015 - 10:19 | 6490019 zaphod42
zaphod42's picture

Don't know if they realize it or not - China's economy was built to service America's consumers.  Now that the great American buying machine is dead in the water, there is no one left to buy their products. 

Oh, the Chinese workers?  Well, if they paid them sufficiently, maybe.  From appearances, though, they can't buy all that stuff either, and certainly not in sufficient quantity to keep the greate engine of the Chinese economy running.

What is the Chinese word for
"Crash?"

Mon, 08/31/2015 - 10:55 | 6490143 fowlerja
fowlerja's picture

Wonder if the communist leaders jailed the farmer who said "it is easier to make money in the stock market than the hard work in farming"...he caused millions to sign up for accounts in the Chinese stock market..his guilt...false advertising...wait ...don't they do that on wall street..suck you in and then "algo" you to death...

Mon, 08/31/2015 - 11:57 | 6490486 gregga777
gregga777's picture

The top leadership of the Chinese Communist Party very cleverly boosted the Chinese Stock Markets Indices and then made the markets plunge while extracting over $1 Trillion from them to fund their overseas retirement plans. Everything surrounding their Plunge Protection Team schemes are window dressing designed to disguise and obfuscate how they ripped off their people who had invested their savings and margin account loans into the Chinese Stock Markets.

They are Con Markets whether they are on Wall Street on wherever the Chinese markets are headquartered.

Mon, 08/31/2015 - 20:24 | 6492808 Winston Smith 2009
Winston Smith 2009's picture

According to Mish (Mike Shedlock), these are the banned words:

 

Slump

Spike

Collapse

Panic

Overvalued

Down Big

High PE

All they're doing is destroying what little credibility they have left even in the typically clueless mainstream financial media, thereby leading to more cash outflows.  China credit crisis, EM problems causing FX contagion, worldwide recession making things much worse for China, all potential triggers for equity crashes due to a glimpse of economic reality overcoming hype.

Do NOT follow this link or you will be banned from the site!