China arrests nearly 200 in stock market crackdown

Arrests relate to ‘rumour-mongering’ about stock market collapse and Tianjin explosions

The “rumour-mongering” arrests come after China’s stock market has seen huge losses since it peaked in mid-June, and worries about economic growth have added to jitters. Photograph: Jerome Favre/Bloomberg

The “rumour-mongering” arrests come after China’s stock market has seen huge losses since it peaked in mid-June, and worries about economic growth have added to jitters. Photograph: Jerome Favre/Bloomberg

 

China has arrested nearly 200 people for online rumour-mongering about the country’s stock market collapse and the recent fatal chemical factory explosions in the northeastern port of Tianjin, as well as other financial wrongdoing, the official state news agency Xinhua reported on Monday.

Xinhua quoted a statement by the ministry of public security issued over the weekend which said those punished in the campaign had expressed repentance over their misconduct that had “caused panic, misled the public and resulted in disorders in stock market or society.”

The arrests come after China’s stock market has seen huge losses since it peaked in mid-June, and worries about economic growth have added to jitters. The government also devalued China’s renminbi currency.

The statement said that 165 online accounts were closed for relevant violations relating to rumour-mongering.

Among the rumours circulating at the time were that a man had jumped off a building in Beijing over the collapse of the stock market and speculation that at least 1,300 people were killed in Tianjin blasts – the official death toll so far is 150, with 23 missing.

“There were also “some seditious rumors about China’s upcoming commemorations of the 70th anniversary of the end of World War Two.”

Chinese authorities keep a tight grip on online information flow, and there are regular crackdowns on charges of “spreading rumours”.

The ministry statement went on to urge Internet operators to strengthen management to ensure cyberspace order.

Among those arrested was Wang Xialu, a financial journalist from the influential Chinese magazine Caijing, who was held for reporting on the government’s stock market intervention. He apologised on national TV for causing “panic and fear” among investors.

“Affected by the report, abnormal fluctuations in the share markets emerged,” Xinhua reported.

Mr Wang was one of a total of 197 people who have been punished in a crackdown by Chinese police.

“I should not have published the report in such a sensitive time,” Mr Wang said on the CCTV news programme. “It caused grave and negative impact on the market … I did it just to create a sensational effect and catch eyeballs. It cost the country and investors very big losses.”

Mr Wang was taken away by police on August 25th, a day after the main Chinese share index, the Shanghai Composite Index suffered its biggest one-day percentage fall in eight years and sparked fear in global financial markets that the world’s second biggest economy was in trouble.

The dragnet included four senior executives from the investment bank, Citic Securities Co., part of the giant Citic conglomerate.

The four executives included managing directors Xu Gang and Liu Wei, who admitted alleged insider trading, and the industry was told to contribute another 100 billion yuan (€14 billion) to a stock market rescue fund.

Liu Shufan, an official with the Chinese regulatory body, the China Securities Regulatory Commission, has been accused of bribery, fraud and completing under-the-table deals.

The Shanghai Composite Index closed down 0.82 per cent on Monday.