Our editors & readers talk
Transparency and the role of media in China
The following is the text of a speech to be given to the Xinhua World Media Summit on October 9. David Schlesinger is the Editor-in-Chief of Reuters.
It is my great honour to address this gathering here today in Beijing.
Reuters association with China began in the 19th century, when the agency began supplying financial and commodities information to clients here.
By the 1930’s, Shanghai was our Asian headquarters.
Today, our offices in Beijing, Shanghai and Hong Kong provide vibrant newsgathering for our global clients who demand information about this vital economy and provide centres for Chinese clients whose need for reliable and instant information about the world’s finances is intense.
From the beginning, Reuters Chinese name was important. 路透社 – the 透 that is the key second character is part of several important words, each of which is central to our mission
“Penetrating”, “thorough” and “transparent” – these are the concepts that we bring to our reporting; these are the concepts that media in China as elsewhere in the world must strive for.
The financial crisis of the beginning of the 21st century has proven again that the Media’s role in providing the transparency necessary for a healthy market economy is vital.
While this concept has been part of Reuters name and our mission for more than a century and a half, the world of course is much different from when we moved reports using carrier pigeons and the telegraph.
The old world of national markets, operating within limited and largely ring- fenced pools of capital is dead. In the 21st century, financial markets are global and integrated– but still fiercely competitive.
Investments shift, at the touch of a trading keyboard, from one market to another, and from one asset class to another. No national government any longer has complete control of economic policy, and no company, person or organisation has unchallenged access to available capital. Financial markets are global.
Commenting on the challenges this environment creates for China’s financial sector, Premier Wen Jiabao has said:
“It is a long-term task to build a capital market that is transparent, efficient, rational in structure, perfect in function and safe in operation.”
Efficiently informed and transparent financial markets are also healthy, sound, orderly and internationally competitive financial markets. These were the lessons of the 1997 Asian crisis, and are once again the lessons of the current global crisis.
The role of financial media is central to delivering the objectives of informed and transparent financial markets, as well as the social stability that depends upon economic success.
For China, the increasing internationalisation of financial markets has at least two dimensions relevant to financial information.
First, Chinese markets participants and investors need to be efficiently informed about foreign markets, while second, their non-Chinese counterparts overseas need to be efficiently informed about China.
Mutual benefit and success depend upon this reciprocal relationship.
It is noteworthy, for example, that China has permitted more Chinese funds to invest in international equities than it has permitted foreign investors to invest in the Chinese stock market.
Accurate and comprehensive information about foreign financial markets is therefore particularly critical for markets professionals in China.
To provide some examples about the increasing global linkage of financial markets news:
US consumption data has become a reliable proxy indicator of the volume of China’s exports, with direct relevance to stock market prices in China.
Likewise, the announcement by China last November that it was to launch a 4 trillion yuan stimulus package caused sharp rises on stock markets not only in China, but all around the world.
Recent news that China has been taking action against polluting metals smelters caused prices on the London Metals Exchange to soar.
Even a seemingly low-key announcement such as China offering subsidies to producers of solar power equipment can cause major stock market rises for shares in non-Chinese companies active in this field.
The integration of China into global financial markets presents numerous challenges for financial media, on which the financial markets depend. But it also presents some challenges for Chinese policy makers to create the optimal conditions in which financial media can operate to respond efficiently to the needs of both Chinese and non-Chinese markets professionals and investors.
Let me respectfully suggest a few areas where China could take steps to facilitate the quality of financial information and reinforce the contribution of financial media:
- Greater discipline around the public release of official statistics:
Economic statistics are, of course, of critical relevance to financial markets. Still too frequently in China, rumours about statistics circulate for several days before their official release. Often the rumours later turn out to have been correct. Those “insiders” with access to the rumours enjoy unfair trading advantages over those who do not.
The correct policy response is not to punish the media for reporting the rumours, but instead to ensure that the processes and safeguards around the release of statistics are tightened. Indeed, where rumours are influencing the market, the financial media has a duty to report them –as rumours– so that the market as a whole, and not just a section of insiders, is informed, understands why the market is moving in a particular direction, and can take appropriate action to safeguard their investments.
It might, for example, be advisable to shorten the time span between the production of the statistics, and/or limit still further those with privileged access to the data before it is released.
- Enhancing the information disclosure policies of government ministries and official agencies that originate information relevant to financial markets.
There has already been some good progress here, with many more high-level news briefings and press conferences by ministerial agencies than there used to be.
I also welcome the initiatives of those government departments that have adopted web release of their information.
I applaud those that have gone one step further to alert reporters to news announcements with helpful text messages. But there is still further to go in extending these examples of best more widely until they become the norm across government.
- Aligning the treatment of Chinese and Foreign Journalists
It is important to gain greater recognition and acceptance of the important role of foreign financial journalists in China. There continues to be insufficient recognition and understanding of the important role that they have in underpinning China’s own economic goals of maximising foreign investment in China.
Journalists working for foreign media are still too often excluded or granted a lower level of access at key meetings.
As Chinese financial journalism professionalises further, I look forward to mutually beneficial competition. I also look forward to Chinese nationals having full careers within foreign media organisations in China. My fervent wish is that one day soon Reuters financial news editor in China will be a Chinese national – one step on that person’s path to be global editor in chief!
Addressing this gathering just a few days after China’s 60th National Day, it’s important to reflect not only on the challenges but on the progress China has made.
When I was Reuters China bureau chief from 1991 to 1994, there was almost no transparency; statistics could not be relied on; interviews were rare; the state of the economy was a mystery.
Today we report on China’s economy with the same intensity and professionalism as we report on any G7 economy. Our clients demand that, and, increasingly, we are able to provide that.
It is important to note as well that transparency must be a reciprocal virtue.
The news media must also be transparent about its standards and its methods.
This has been particularly true during the current financial turmoil – the media industry was in its own crisis at the same time as it was reporting on the financial downturn; our sources and our readers were in crisis, too, and this meant that our stories were watched extremely carefully and people were quick to complain about anything they didn’t like.
I am proud that most of our reporting was excellent, but those times when we didn’t get it right it was vital to correct our errors swiftly and publicly.
Maintaining our trust with our audience is fundamental to our mission as a news service. Reporting truthfully, reporting accurately, correcting errors, obeying our standards are all vital and can’t be compromised, especially not in the heat of a major and complex story.
We’ve learned important lessons from this period.
One lesson was that our standards needed to be constantly examined and sometimes strengthened.
Another is that transparency is rewarded by trust.
This year we put our entire 500+ page Handbook of Journalism free online for anyone and everyone to read and comment on – we welcome that scrutiny from around the world.
Where our standards are good and we live up to them, we want the attendant praise.
Where we need to improve, or where we fail to live up to our ideals, we want the criticism.
That should be the attitude that we in the media should strive for.
I believe Journalism at its best is a mirror, exposing back to society a true and brutally honest picture of what is going on.
When we fail at that, when our picture is not clear or at all distorted, we deserve to be criticised. We must strive to be that perfect mirror.
But for societies and economies to truly work, to be effective and to be healthy, they need to look into that mirror unflinchingly and honestly.
That is where the virtue of transparency comes in.
That is why companies and government departments and government officials need to be ready to be open. That is why they need to take interviews and to reveal figures. That is why the instinct for secrecy needs to be resisted.
That is why all involved need to help the media help society, by accepting that while openness, transparency and accountability may lead to momentary discomfort and sometimes embarrassment, they are ultimately worthwhile and, in fact, are a precondition to a truly healthy, stable and successful system.
Similarly, a commitment to these practices is also a precondition for China’s development of healthy, sound and internationally competitive financial markets that protect domestic investors and encourage foreign investors to place their capital.