Market crash: Did Western media play fair?

The author is a distinguished scholar of Asian and Pacific Studies at Loyola Marymount University.

Pure objectivity and total accuracy is difficult to achieve in journalism. But they were almost totally ignored in cold and unsympathetic Western media commentaries on China's recent stock market crash.

Press punsters could not resist the cheap headlines. It was as if Western journalists had never seen a stock-market bubble burst, or witnessed a gigantic sell-off of shares. Beijing's counter-measures were "desperate", and only the country's "compliant press" would find them credible. The claims that authorities were "in danger of losing credibility", and China's market began to look "more like the Wild West" are some of the examples from the commentaries.

The Western media also suggested the world fall down on its hands and knees in obeisance to the "free market". But even if the god of the absolutely free market actually exists, is this imaginary god not the same one that has failed us again and again?

It takes no Marxist to point to the lack of the market's magic in 2007-08, when US avarice, incompetence and deregulation helped seed a huge global crisis - widely viewed as the worst since the Great Depression of the 1930s. This devil of a god that continually fails was surely less than magical in 1997-99 when relatively open stock and equity markets in Asia had the life wrung out of them by avaricious Western funds viciously shorting even otherwise well-regulated markets.

The most famous example back then came from Hong Kong, which rebounded when the alert local government, then led by chief executive Tung Chee-hwa, counter-attacked Western speculators with massive equities purchases, an astute ploy personally approved by then premier Zhu Rongji.

Western financial media were quick to denounce the government's bold intervention as a betrayal of "free-market" ideals. But the effort worked wonders to bee-sting the short sellers, scaring them off to go buzzing for easy honey elsewhere. And the West was quick to denounce then Malaysian prime minister Mahathir Mohamad for initiating overnight capital controls to push back Western speculation from his country.

But history was to rate well that pragmatic ploy: a blue-chip 2001 Harvard Kennedy School study praised the intervention for yielding a faster economic recovery, smaller declines in employment and wages, and a more rapid turnaround in the market.

In a serious financial or market crisis, positive government intervention is a moral, political and economic necessity. Leaving everything to the magic of the "free market" is like avoiding quarantines and vaccines in an epidemic. No doubt, the efforts of the Chinese government, so very new to the game, lacked the discipline and coherence of, say, a municipal fire department with vast experience in conflagration containment. So the Western media was not wrong to note that the central government's thrown-together fire drill lacked the seamless self-assurance of a Balanchine ballet. What was really troubling was the evident glee scarcely hidden in the reportage.

It was as if the Western media were almost rooting for China to fail. But if China were somehow to collapse it would not be more than 1.3 billion Chinese alone that would suffer. The fallout would cause pain for the people of every country in Asia, and for the people of every country in North America, especially in the US, itself having been so buoyed by China's economic rise.

Why anyone would root for China to keel over is beyond understanding. It is not only dumb, from the standpoint of economic self-interest. It is also a moral wrong. China's market crash suggested a disturbing Western callousness. Is there only darkness in our hearts when it comes to China?

The author is a distinguished scholar of Asian and Pacific Studies at Loyola Marymount University.