In an unprecedented move that echoes through the financial world, China has tightened its grip on economic discourse, effectively outlawing negative narratives surrounding its economy. This development came to light in reports circulated by Bloomberg among others on Friday.

According to a memo from the Chinese Ministry of State Security:

“To maintain economic security, we must unswervingly adhere to the socialist economic system… Currently, the economic field has increasingly become an important battleground for competition among major powers, and the international environment is becoming more complex, serious, and uncertain. To promote economic recovery, we must overcome internal difficulties and face external challenges. For example, various ‘clichés’ that intend to sing about the decline of China’s economy continue to appear, which are fundamentally an attempt to use false narratives to build ‘discourse traps’ and ‘cognitive traps’ about ‘China’s decline’ to attack the socialist system with Chinese characteristics.”

In essence, this is a direct command to cease the publication of any pessimistic stories about the Chinese economy, or risk arrest.

This directive also signifies a not insignificant danger for economists and economic journalists in China. How can international banks, for example, those in Shanghai, write commentaries on economic indicators if the figures are not as expected?

For instance, according to November’s consumer price data, China is experiencing deflation—a far cry from good news. To avoid punitive measures, one must either ignore the figure, misrepresent it, or assert that what is bad is, in fact, good.

Having dealt with emerging market economies for over two decades, skepticism towards the accuracy of published data is normal, but I’ve always believed that the discussions around these figures among local Chinese economists were somewhat valid, even if the actual numbers were not always trustworthy.

China’s trajectory towards the suppression of speech and information freedom increasingly mirrors that of North Korea, and it also distinctly suggests that those of us who have been (very) skeptical of China’s economic progress were correct.

As an independent economic advisor, I’ve advised economic-political decision-makers in countries where the press is anything but free. My experience tells me that in such countries, even the powers that be have no real idea of the state of the economy due to the lack of public debate.

This is the path China is rapidly heading down, and it will only worsen the quality of its economic policy.

Therefore, my clear advice to Western companies and investors is this – exit China sooner rather than later.

I regularly hold lectures on China’s economic crisis. If your company wishes to engage with the crisis, I am also available to facilitate internal workshops on the subject. See more information here or drop me a mail (lacsen@gmail.com).

Appendix: Embracing AI in Economic Discourse

I have been using Midjourney to create AI-generated images and illustrations, often with a humorous touch, for my writings and lectures.

While that has been reasonably successful, Midjourney’s interface is not conducive to creativity and back-and-forth interaction with the AI.

However, with the integration of DALL-E into ChatGPT 4.0, the ability to create illustrations has significantly improved.

This morning, I wrote a brief article on Chinese censorship of poor economic data and needed a humorous illustration to accompany it.

So I requested assistance from ChatGPT/DALL-E. Given that the AI could read my article, it produced a draft for a humorous illustration based on it. Below are some examples of what the AI generated.

I find the results quite impressive and funny. However, notice that there are spelling errors, a problem also known from Midjourney (where it is somewhat worse), but I consider these teething issues. Very soon (within a few months), this problem will be resolved—at least judging by the speed of development we’ve seen so far.

Afraid of losing your job to AI? Don’t be – it’s time to embrace technology. It’s fun and enables you to produce a far superior product. Personally, I believe it greatly rewards creativity.

But first, take a look at DALL-E’s quite brilliant humorous illustrations of Chinese censorship. We conquer censorship by confronting it – and laughing at it.