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China’s Discourse Right on Financial Market Information

[Editor’s Note: On July 16, 2010, an article was published on Qiushi, the core publication of the Central Committee of the Chinese Communist Party. The author is the deputy editor-in-chief of Xinhua News Agency, a ministry level government agency. The article is about strengthening China’s discourse right in the financial industry. In particular, it criticized the developed nations for monopolizing financial information and gaining an unfair advantage over developing nations. The article highlights Xinhua 08, a financial information portal developed by Xinhua to compete with Wall Street technology. The following is a translation of excerpts from the article] [1]

With the current situation of economic globalization, the economic discourse right of a nation determines the power of its influence. The economic discourse right’s core is the financial discourse right, and it has two layers – collecting power and propagating power. Collecting power is the capability of capturing real-time information around the world according to the nation’s needs, especially financial market information. The more information collected in a more timely and more comprehensive manner, the stronger the collecting power and the greater the discourse right. Propagating power is the capability of spreading the nation’s voice, according to the nation’s needs, to the world in real-time, especially to financial institutions and capital markets. The stronger the propagating power, the more influential a nation is and the greater discourse right it has. Collecting power determines propagating power, propagating power determines influential power, and influential power determines soft power.

With the current situation of economic globalization, economic information security matters for a country’s national security. The economic information security’s core is capital market information security and it has two layers – content security and technology security. Currently, many capital market transactions and financial flows are completed through network-based trading platforms. Incomplete, false, and distorted information can mislead capital’s direction and disrupt the market. The failure of core technology, network vulnerabilities, hackers, and viruses all can cause a lot of wealth to vanish instantly. Without information security, there would be no transaction security, financial security, or economic security, and thus national security would make no sense.

The current global situation concerning discourse rights and information security are worrying. The major issues are that the order of information dissemination is unfair and information security is controlled by just a few countries. First of all, there is an imbalance in information resources – 20% of the world’s population holds 80% of the information resources; and 80% of the population can only access 20% of the information resources. The polarization of information rich countries and information poor countries is severe. This situation has not improved and in some regions it is actually getting worse. Second, the information does not flow equally. The amount of information flowing to developing countries from developed countries is over 100 times more than that from developing countries to developed countries. Most developing countries are unable to take the initiative and use effective ways to disseminate their information and they cannot timely and sufficiently obtain the information needed. Third, the order of information dissemination is unfair and unjust. A small number of information agencies release financial information. They represent the interests of only a few groups, but they monopolize the entire process of information collection, processing, publishing, and dissemination.

Relying on their strong economy, military, science, and technology, the Western developed countries frequently take a position as speakers in public, and in turn the western language system has become the popular discourse. Popular discourse usually implies hegemonic discourse. With that, they deny other countries the right to speak, not to mention the discourse right of other countries. Some of the most important causes of the international financial crisis were that the information collection right was monopolized, the dissemination right was controlled, the risks and the true stories were covered up, and the investors were deceived by wrong information and ended up putting their money into a financial abyss. After the outbreak of the financial crisis, developed countries used their strong discourse right to try to transfer the risk to other countries. At the same time, the developing countries worked tirelessly to enhance their discourse right in the international financial system.

The current status of developing countries’ discourse right can be summarized as lacking the right to speak: their voice cannot be spread. If it is, it will be distorted; information cannot come in and if it does it will not be reliable. We discuss first that their voice cannot be spread. For example, on a random day, at a major information exchange platform on Wall Street, the only news about China, which was repeatedly disseminated, was the message of a mining accident. There was definitely other valuable news from China that day, but because we do not have our own financial information platform, the other more objective news could not get into the global market, so we could only let others choose what they wanted to display according to their values and interests. Second we talk about how information cannot come in. Western information agencies mostly monopolize the financial information of the world’s major financial markets. The data that developing countries obtain are mostly referred or bought in. Thus all the decisions made by the developing countries are based on the analyses of these second-hand data. So one can imagine what the outcome is like. In 2008, the Xinhua News Agency set up a financial information collection point on Wall Street. Up to today this is still the only one on Wall Street for all developing countries.

The current information security situation in developing countries can be summarized as no security. Core technology and the ability to control are lacking. First, we talk about the lack of core technology. Western information agencies mainly hold the core technology of the financial information platform. Including China, all the developing countries deeply depend on them. In the 1970s and 1980s, when China’s capital market was first created, western organizations gave their terminal products to our financial agencies for free. With these products they pretty much took control of the security of our financial information. Second is the lack of the ability to control. Our domestic financial agencies have always been receiving information and completing transactions using the terminals of foreign services. Not only do we have to pay high service fees, but also we have to accept their humiliating tyrannical terms. There is no need to even mention the ability to control. For example, our agency learned, in the research conducted for the China Aviation Oil Incident in 2004, that one of the major causes was that during the transaction process, the data leaked out and therefore opponents jointly attacked the Chinese operator. The international speculators were well aware of our situation, but we did not know their situations at all.

The key factors for improving our country’s discourse right and information security include enhancing our national power and other means, such as acquiring core technology and perfecting the legal system. Among them, the construction of a financial information platform that has independent intellectual property rights is a high priority. This platform should have the following characteristics. First, it needs to be comprehensive. It should be able to provide a variety of comprehensive financial services to financial institutions and other customers. It should be able to obtain and analyze first-hand information prior to a transaction, submit transaction orders, take care of necessary details during the transaction, clear funds, complete the order, accept feedback, have a user support system, process information, and so on, after the transaction. All these need to be done in one system and the whole process should be completed within several seconds. Second, its scope should be large and it must be effective. The system should be very large scale and able to effectively disseminate market information, including both pre-trading market dynamics, changes in economic and social situations, and real-time prices on the market, as well as post-trading information, such as trading quantity and price data. Third, the system needs to be relevant and interactive. Traders only need to be connected with the electronic trading system; their physical locations should not affect the transaction. The system should allow continued interactions and facilitate cross-border transactions. It should also aim to speed up the integration among different systems in other markets.

In accordance with the Party Central Committee and State Council’s requirements, Xinhua News Agency independently developed a new financial information platform called Xinhua 08, to provide information and supporting services for financial institutions and non-financial enterprises in global financial transactions. This is the first platform ever developed by developing countries. Xinhua 08 currently focuses on the RMB market, and has become an important assisting project for the internationalization of the RMB. In enhancing the discourse right, Xinhua 08 focuses on enhancing the gathering power of obtaining global financial information; setting up more and more financial information collection points in various global financial centers; and enhancing China’s power of information dissemination by establishing a service network that faces the global financial markets and has multilingual, multi- terminals, and the capability of 24-7 information dissemination, to achieve the ability of multi-way dissemination, including computer terminals, mobile terminals, video terminals, the Internet, and LCDs. Through providing analytical tools, pricing models, and RMB assets trading support systems, Xinhua 08 helps to improve the pricing of the RMB’s assets. In strengthening information security, Xinhua 08 is China’s own system with independent intellectual property rights and is an efficient, reliable, and secure system. Currently it is capable of providing users with dozens of types of data and services, including information, quotes, data, analyses, modeling, trading, consulting, publishing, and personalized services. The independently developed RMB bond system is currently the only analyzing system capable of providing real-time yield curve analyses of RBM bonds. The 40 financial models, which were also independently developed, are accurate to eight decimal places, more accurate than other similar products in the world.

[1] Qiushi journal, July 16, 2010