The US dollar, media and other dead horses – the WTO column

(soon also in Chinabiz)

It was a nice scope, last week, of the China Business News, the most recently emerged financial daily, the fourth one competing for the title of the Chinese Wall Street Journal. They revealed that China was quietly selling off its US-dollar denominated treasury bonds. Of course that news did very little to help stop the US dollar in its way south.
The swift denial of the news by the financial authorities in Beijing confirmed only the financial paper was on the right track. It is a dilemma financial authorities worldwide face: when the media are writing you’re selling off your assets, the value of your assets might shrink before you have actually sold them off. The financial authorities in Beijing would not be fit for their job, if they had not been selling off the US dollar valuables, but they can of course never admit it without causing severe damage to their own position.
It is the same with the much-discussed revaluation: as long as the media keep on writing it is coming, as long as the money markets are in a state of panic, no revaluation will be possible.

I cannot remember any other instance where a Chinese medium did so clearly what they had to do: publish the news, regardless of what their bosses in Beijing might think of that. Standard procedure in China would be that the censors would order the media not to write about the issue, and then it was basically over.
That is good news for the media, and I needed to hear some good news about the Chinese media, after I have been catching up with a wide range of colleagues over the past few weeks.

The traditional media are worldwide a shrinking industry. Cost cutting is hitting resources, jobs and payments everywhere. Media owners are not investing in research and development, but try to raise their profitability, sometimes very successful up to 20, 30 percent return on equity. Then they try to sell it off, preferably to some suckers at the international stock exchanges, who do not realize that they are in fact buying a dead horse, whose glory days are already gone.
It is not unlike the Chinese government trying to get rid of as much as possible of their US treasury bonds before everybody knows. As long we can pretend the horse is not yet dead meat, we might still get a good price for it. The sale of the 150 billion Renminbi non-performing loans shows what happens. Foreign investors offered three percent of the nominal value: about the price for the meat of a dead horse.

Are the Chinese media doing better than the foreign counterparts? They are still very new in this game of trying to do as if they are real media, and not a list of governmental announcements. Can Chinese media do a better job, while in the rest of the world’s media participants are looking for a save departure from the industry? Apart from this little incident with the China Business News, the picture really looks rather gloomy and there is no sign media are really investing in their people, also not in China. You know what an editor of the glossy men’s magazine FHM makes a month? About 3,000 Rmb (USD 360), while freelancers earn 300 Rmb (USD 36) for 1,000 words. I was shocked, until I learned that freelancers at the Shanghai Times, one of the more successful dailies in this city, make 100 Rmb (USD 12) per 1,000 words. They have even no room to cut any costs.
Some of the foreign media people are looking at China as the new paradise, at least commercially, they have lost at home. I’m not sure it is here. Like in other industries, the bottom is always much lower than you can imagine.

Fons Tuinstra