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. Last Updated: 07/27/2016

China Curbs Market Data Flow

BEIJING -- China showed the world who was in charge Tuesday, damming the free flow of news to financial markets and boosting earnings for the state.


The Xinhua news agency, an arm of the State Council, won control of domestic distribution of economic information by foreign news agencies and reversed an easing of its tight grip on news to China's 1.2 billion people.


The move blocks access among China's pioneer teams of brokers and futures and foreign-exchange traders to the real-time information that has enabled them to compete head on in international markets in recent years.


"If this is fully implemented, it will affect domestic companies as they will not receive the news as fast or as completely as they do now," said an analyst with a foreign brokerage in Shanghai.


The broker, who works for a foreign-owned firm, said her company could benefit in that it would have faster, more complete access to information than domestic rivals because of her contacts with the parent company abroad.


However, losses suffered by Chinese traders were among the least of the concerns of the State Council when it decided to issue the directive, a media analyst in Beijing said.


"The [Communist Party] propaganda department has been very concerned about the unchecked flood of foreign information and now they've won their point," the analyst said.


"Losing money really isn't important compared with keeping their control of information," he said.


An increasingly free flow of information has been one of the engines of China's economic boom since Deng Xiaoping launched his liberalization of the economy in 1979 by dismantling of Stalinist economic orthodoxy.


A researcher at a Chinese brokerage in Shanghai voiced disappointment at the clampdown, saying it would affect the amount and speed of information his firm would receive.


"We will certainly be affected since we will not receive the news so quickly or so directly," he said.


The move could be aimed at drying up rumors that have triggered wild fluctuations in China's fledgling markets in the absence of a steady information flow. Among the most provocative is speculation about Deng's health -- reports of which have sent markets tumbling.


"Markets depend on accurate and fast information, not propaganda," an information consultant who does business in China said in Beijing.


"If it means Xinhua will control all information about China's own financial markets, it will kill those markets.


Foreign information vendors reporting on China's markets include Reuters Holdings plc, Dow Jones-Telerate and Bloomberg.