The Dangers of Bloomberg’s China Blindness
Last week, the chairman of Bloomberg LP indicated that the company is backing away from its admirable investigative reporting on China’s elite, apparently with the aim of protecting its core financial-data business from political reprisals. This is alarming for many reasons. It is a remarkable capitulation to Chinese pressure by a major American news outlet. It seems likely to harm the company’s prospects by degrading the value of the information it provides. But most importantly, it robs the world of vital insight on the Chinese economy at an especially perilous moment.
The decisive collision between Bloomberg’s news division and the Chinese authorities occurred in June 2012, when an investigative article explored the massive wealth accumulated by relatives of incoming Chinese Communist Party leader Xi Jinping. The Bloomberg News website was quickly blocked in China, and it remains inaccessible to date. In addition, officials reportedly instructed state-owned enterprises not to subscribe to Bloomberg’s financial-data service, which accounts for some 82 percent of its total revenue worldwide, though it is struggling to grow in China. Bloomberg was also generally shut out of official Chinese press conferences.
Over a year later, in the fall of 2013, Bloomberg reporters were still working on intrepid stories about the self-serving financial arrangements of China’s ruling class. However, when a team of journalists sought to publish a lengthy investigation of links between China’s richest man, Wang Jianlin of the Dalian Wanda Group conglomerate, and the families of Communist Party leaders, Bloomberg’s top brass stepped in to block it.
Editor in chief Matthew Winkler reportedly explained in an internal conference call that Bloomberg could be “kicked out of China” if it ran the piece. According to individuals on the call, he noted that American media outlets had been forced to self-censor during the 1930s so as to maintain a crucial presence in Nazi Germany. News of these remarks apparently angered Chinese officials, who initiated a series of unannounced “inspections” at Bloomberg bureaus in Beijing and Shanghai.
It is worth noting that the company had already taken steps to minimize the impact of its more politically sensitive stories in China, applying a special code that prevented them from appearing on its financial terminals in the country.
Last Thursday, Peter Grauer, the chairman of Bloomberg LP, gave the clearest signal yet that the company was abandoning politically risky reporting on China. Speaking in Hong Kong, he said that the sheer size of the Chinese economy meant that “we have to be there.” Without mentioning a specific article, he noted that Bloomberg reporters occasionally “wander a little bit away” from strictly business-related topics, and that they “should have rethought” such deviations.
This response by the company reveals an incredibly narrow understanding of what it is selling. Investors around the globe need accurate and complete information on the Chinese market—the world’s second-largest—as the government pursues delicate economic reforms amid slowing growth and dangerous structural distortions, including industrial overcapacity, private and local government debt, and inflated housing prices. But no one can get a full picture of the Chinese economy, or of individual Chinese companies, without considering political factors.
Every Chinese company is influenced in some way by the overbearing Communist Party government or individuals with personal connections to its leaders. As Bloomberg should know from its own experience, any of the country’s technology giants—some of which are planning stock offerings in the United States—could be closed down by government fiat if they anger the authorities, and the red lines are not always clear.
Similarly, every proposed economic reform affects a powerful interest group that may seek to block it through political maneuvering, however vital it may be for the country as a whole. And even if the whole ruling class agrees on a given economic change, implementation may be hampered by the social forces it unleashes. The Communist Party prioritizes its political survival above all else, and any reform that causes widespread dislocation and protests could be quickly abandoned, despite the long-term risks of inaction.
Elite corruption, the topic that Bloomberg seems to have specifically shied away from, is perhaps the most volatile and important factor of all, affecting company performance, government functions, and social stability. Businesspeople and other readers will want to know if a company must buy influence and protection from officials, navigate a market warped by corruption-driven spending priorities, or weather eruptions of public anger at official graft.
In short, Bloomberg will utterly fail in its mission of keeping investors informed if it tailors its coverage to suit the Chinese authorities. By pursuing the mirage of expansion in the Chinese market on the Communist Party’s terms, it will sacrifice its utility to existing customers. And the damage to the information landscape more broadly will no doubt affect other news consumers, including Chinese citizens.
Some news organizations continue to resist pressure from Beijing and conduct investigative reporting on the Chinese leadership. The New York Times is most notable in this regard, forging ahead even though, like Bloomberg, its website has been blocked in China since 2012 and its reporters have struggled to obtain visas and press cards.
Nevertheless, very few media outlets have the resources to support serious investigative reporting in China, much less withstand the anger and obstacles thrown up by Chinese authorities, which have increased for all foreign journalists in recent years. If these few outlets surrender voluntarily, the world will be left to stumble toward its political and economic future with an enormous, China-shaped blind spot.
Photo Credit: Derivative of image by Christopher Michel / CC BY 2.0
Analyses and recommendations offered by the authors do not necessarily reflect those of Freedom House.