Yesterday while reading the morning audio comment from UBS' top economist Paul Donovan, one section was dedicated to China's latest inflation print, which struck us as a tad bizarre even for the famously whimsical, humorous and sarcastic Donovan, and we promptly tweeted it:
"Chinese consumer prices rose. This was mainly due to sick pigs. Does this matter? It matters if you are a Chinese pig" - UBS— zerohedge (@zerohedge) June 12, 2019
For those curious, the full comment was the following:
Chinese consumer prices rose. This was mainly due to sick pigs. Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world. China does not export a lot of food. The only global relevance would be if Chinese inflation influenced politics and other policies.
To be sure, we didn't find Donovan's comment offensive, racist or excessive in any way - and was generally representative of his caustic and dry wit - yet someone else did. In fact, quite a few humorless someone elses.
Shortly after we tweeted UBS' snide take on China's inflation, our tweet made its way all the way into the mainland, where it caused quite a stir, and resulted in a furious backlash against the largest Swiss bank. Here is what China's notoriously globalist tabloid said on Thursday morning:
UBS chief global economist Paul Donovan used distasteful and racist language to analyze China’s inflation in a recent UBS report, sparking uproar across Chinese social media. Chinese netizens called for an official apology from #UBS.
#BREAKING UBS chief global economist Paul Donovan used distasteful and racist language to analyze China’s inflation in a recent UBS report, sparking uproar across Chinese social media. Chinese netizens called for an official apology from #UBS. pic.twitter.com/uTMR6wyj02— Global Times (@globaltimesnews) June 13, 2019
This unexpected international escalation over what was an attempt at humor, prompted the Zurich-based bank to issue a formal apology, saying the remarks in Paul Donovan’s Morning Audio Comment, were "innocently intended", and that Donovan was speaking in reference to the rise in Chinese consumer prices that were mainly due to sick pigs. “Does this matter?” he said. “It matters if you are a Chinese pig. It matters if you like eating pork in China.”
Donovan echoed this in his Thursday Morning Audio Comment, where he said "First, an apology to my China listeners about yesterday's podcast about inflation in China. I apologize unreservedly for any misunderstanding caused by my innocently intended comments. We have removed the audio comment from circulation. To be clear, this comment was about inflation and Chinese consumer prices rising, which was driven by 14.4% year-on-year higher prices for pork."
Shortly thereafter, to avoid any further complications, Donovan also appeared on Bloomberg TV, where he doubled down saying "I made a mistake and I unwittingly used hugely culturally-insensitive language,” in a Bloomberg TV interview with Francine Lacqua, adding that his remarks were not intended to offend. “I apologize publicly for that."
But it was too late, as by then Donovan’s remarks had sparked outrage on social media sites in China, with users saying the comment humiliated Chinese people. At least three public accounts published articles about the report on WeChat, drawing more than 10,000 hits. Screen grabs of the report also circulated on chat groups. Some users posted a link to a UBS web page for filing complaints.
As the Global Times added in a subsequent report, "Chinese netizens were outraged on Thursday by a UBS report that used distasteful and racist language to analyze China's inflation and called for putting the Swiss bank on the Chinese Unreliable Entity List despite an apology for what it calls its “innocently intended comment"."
And now we know what triggers China's "Unreliable Entity List" - jokes about inflation and pigs which apparently results in 1.4 billion Chinese going full Hulk.
As the tabloid adds "some considered the UBS apology and the analyst involved not sincere, which they said reflects the deep arrogance of Western elites to Chinese culture." Well that, or it reflects the fact that the Chinese culture is missing a sense of humor, case in point: "The report sparked outrage among Chinese netizens and some economists on China’s Weibo and Twitter."
“Hey, UBS, I think it’s time for you to get out of China,” a Twitter user surnamed Zhang said, echoed by another Twitter user laughing at the Swiss investment bank and its analyst who shot himself in the foot with his pun.
It gets better:
The UBS report was widely circulated on Chinese social media on Thursday morning, and many strongly condemned it and asked for an official apology from the company. Later in the afternoon, UBS sent out a brief statement, calling it an “innocently intended comment.”
“We apologize unreservedly for any misunderstanding caused by these innocently intended comments by Paul Donovan. We have removed the audio comment from circulation,” UBS told the Global Times on Thursday, noting that to be clear, this comment was about inflation and rising Chinese consumer prices, which was driven by the higher prices for pork.
UBS takes this matter seriously. We are enhancing our internal processes to avoid any recurrence of a similar situation. We remain fully committed to investing in China, the company statement said.
Clearly, many Chinese did not buy his apology. “Normally, white elites do not have regard for other races, and Westerners usually call Chinese people Chinese pigs,” a netizen using the pseudonym Xifan said on Weibo. Another one who goes by Tianzheyou said it is a pun, while other netizens think that the apology was unacceptable.
What can one say but... "what?"
As the Global Times subtweeted the Swiss bank, "UBS, the first fully licensed foreign-invested securities firm in China, became the first foreign bank to gain majority control of a securities joint venture in China in December 2018. The Switzerland-based bank was allowed by the China Securities Regulatory Commission (CSRC) to increase its shares in its securities joint venture in China from 24.99 percent to 51 percent."
Unfortunately for UBS, that one innocent comment can soon cost the bank billions in Chinese lost revenue:
A netizen named Xiyoufodongyoudao suggested on Weibo that China should stop its cooperation with UBS and the firm should be put on China's "Unreliable Entity List."
As a reminder, China announced on May 31 that it would create an "Unreliable Entity List" of foreign companies and individuals that threaten the interests of Chinese companies. Or apparently, joke about the fact that China is unable to contain its "pig ebola."
Not everyone lost their minds, luckily, and some netizens considered it as an unintended mistake, which might have been exaggerated. Alas, most did: a Beijing-based white collar employee surnamed Wang criticized the UBS apology, claiming it worsened the situation. “Not only did it not offer a sincere apology by saying that this was about consumer prices and higher pork prices, but also implied that Chinese people could not read English properly,” he said.
“The problem is not that people do not understand what the article is about; the problem is that they chose a phrase (Chinese pig) that has clear racist connotations,” he added. Actually, it doesn't, and it shoes that Chinese people indeed can not read English properly when they are hell bent on creating an absolutely idiotic provocation, but whatever.
The incident also sparked uproar among some Chinese economists, who saw the UBS remarks as unprofessional and tone-deaf.
“As a professional financial analyst, he [Donovan] should have carefully chosen his words, and avoided being misunderstood,” Dong Shaopeng, a veteran analyst who advises the CSRC, told the Global Times on Thursday.
However, the UBS apology should be respected and taken into the account, he suggested, noting that China should not narrow-mindedly reject the foreign bank from participating in the country’s future financial market opening-up because of this incident.
“UBS still plays an important role in China’s financial reforms,” he said.
Whether UBS will soon be declared non-grata in China remains to be seen, but one thing is certain: any strategist or economist writing about China, whether it is about its expensive pigs, or the fact that its financial system hangs by a thread and the country is one uncontrolled bank run away from a social revolt, will twink twice before hitting save.