With a cash crunch roiling the Chinese economy, propaganda authorities have told local media to tone down their reporting to help stabilize financial markets.
In a directive written last week and transmitted over the past few days to newspapers and television stations, local propaganda departments of the Communist party instructed reporters to stop "hyping the so-called cash crunch" and to spread the message that the country's markets are well stocked with money.
Chinese propaganda officials regularly send guidelines to the nation's media about sensitive political subjects, telling them which words to avoid and how to frame their reporting. But it is rare for such instructions to be sent to financial media.
Last week's directive is an indication of the concerns in Beijing about the dislocation and growing panic in the country's markets following the onset of the cash crunch.
"First, we must avoid malicious hype. Media should report and explain that our markets are guaranteed to have sufficient liquidity, and that our monetary policy is steady, not tight," the directive said, according to a text obtained by the FT.
"Second, media must strengthen their positive reporting. They should fully report the positive aspect of our current economic situation, bolstering the market's confidence," it continued. "Third, media must positively guide public opinion. They should promptly and accurately explain in a positive manner the measures taken by and information from the central bank."
The directive was written early last week when the Chinese stock market lost more than 10 per cent in a day and a half of trading. But it has just begun to spread more widely to the nation's media outlets. An economics editor with a leading newspaper received it three days ago and a television producer in a large northern city said the message was conveyed to staff at a Monday meeting.
Investors have calmed down substantially since the middle of last week when the central bank vowed that it would backstop cash-strapped banks with direct injections of money. The stock market has clawed back some of its losses and interbank rates have eased from their unprecedented peaks, though they remain higher than their normal range before the turmoil.
The term "cash crunch" is still being used widely in newspaper headlines and television reports, but the tone of the coverage does appear to have been softened.
The central propaganda department did not immediately reply to requests for comment.
Two weekends ago when ATMs at some of China's leading banks were suspended for an hour for system upgrades, Chinese media seized on the incident to question whether the banks were running short of cash.
Over the past weekend, several banks again temporarily suspended operations for what they said was routine system maintenance, but there were no similar reports about cash shortages.
In one of the most alarming reports during the panic, 21st Century Business Herald, a financial newspaper, reported on June 20 that Bank of China had defaulted on an interbank payment, prompting a denial from the bank. The 21st Century Business Herald website later issued an apology. The Wall Street Journal reported on Tuesday that Ma Kai, a vice-premier, had ordered an investigation into that rumour.