No one knows for sure who wrote it, when they did it, or if it’s true. But a four-paragraph screenshot detailing a plan to reopen China was enough to send traders buying shares of the Shanghai floor for two days straight.
The unverified post, which contained black characters on a white background with no identifying marks, began circulating Monday night in WeChat messaging groups packed with analysts and fund managers, a dozen investors told Bloomberg. The next morning, it spread like wildfire.
It’s rumored that Beijing will soon establish an expert team to put together a “conditional reopening plan.” The goal is to materially reopen the country by March next year. The upcoming 10th edition of covid guideline is widely expected to provide upside surprises. pic.twitter.com/5gwK0tIMCD
— Shanghai Macro Strategist (@ShanghaiMacro) November 1, 2022
The screenshot claimed that Wang Huning, one of the seven members of the powerful Politburo Standing Committee, had held a Covid-19 expert meeting on Sunday at the request of President Xi Jinping. The message referred to Xi as “big boss” and used “WHN” to quote Wang in an attempt to circumvent censorship, which strictly manages messages and posts on social media from China’s political elite.
“It is rumored that Beijing will soon create a team of experts to draw up a conditional reopening plan. The goal is to reopen the country by March next year. The upcoming 10th edition of the Covid guidelines is expected to provide surprises.” He added that those attending the meeting, who would include members of the economics and propaganda departments, would have discussed “accelerating a conditional opening plan, with the goal of opening substantially in March.”
The message gained more force when it was shared at 11:26 AM (Beijing time) by “96 Old Stock Trader” on Xueqiu, a Chinese-language financial platform. Less than 20 minutes later, prominent economist Hong Hao tweeted something similar: “Heard that the Reopening Committee has been formed and led by Wang Huning, a permanent member of the Politburo. The Committee is reviewing Covid data from the US/Hong Kong/ to assess various reopening scenarios, target reopening March 2023,” Hong Hao noted.
Heard that “Reopening Committee” has been formed & led by Wang Huning, Politburo Standing Member. The Committee is reviewing COVID data from US/HK/SG to assess various reopening scenarios, target 03/2023 reopen.
HK finally rebounded 3%, A-shares +1%. $EWH $KWEB $FXI $PGJ https://t.co/ZgN2EYqUzH
— Hao HONG 洪灝, CFA (@HAOHONG_CFA) November 1, 2022
Shortly after publication, the MSCI China index was already on track for a $320 billion rise. The gains extended on Wednesday and raised the total two-day gain for the stock market to $450 billion.
Investors have been looking for reasons to buy Chinese stocks, which are among the world’s worst performers this year, at a time when the economy is growing at the slowest pace in four decades.
Pandemic lockdowns, weak consumption and a battered real estate sector have clouded investment prospects in China. And now that Xi has cemented his power with a third term as general secretary of the Communist Party of China, steps to boost the economy are expected to be taken at the upcoming annual session in March. “Reopening is not an overnight decision,” said Hong, partner and chief economist at hedge fund Grow Investment Group. “It has to be through careful study and communication. That is why most of us think that after the Sessions in March it is a good time to reopen.”
The risk of disinformation in a country that controls the messages
- Censorship. The mysterious message episode is an example of how difficult it is to obtain accurate information in the world’s second largest economy, where internal government deliberations and data affecting leadership are closely guarded secrets. This means that large policy changes can be leaked in unusual ways, even if they are not verifiable.
- No comment. China has officially steered clear of the rumours, with state media ignoring them in recent days. A Chinese Foreign Ministry spokesman said during a press conference on Tuesday that they were not aware of the rumour. Press questions on the subject were deleted from the official press conference.
- More rumours. On Wednesday, rumors continued as markets continued to rally. Twitter user Shanghai Macro Strategist, who claims to be a China strategist and has more than 14,000 followers, posted screenshots that appeared to come from two Chinese stockbrokers reporting upcoming Covid policy changes.
- Screen shots. One of the screenshots showed Haitong Securities saying a meeting would be held on Friday to ease quarantine requirements and lift flight restrictions, among other measures. firm said the capture was not true.