The palest ink is better than the best memory.” China’s vast lexicon of idioms is replete with reverence for the reliability of the written word. But the country that started writing on oracle bones more than 3,000 years ago finds itself the victim of a dangerous information gap.
A wholesale breakdown in the reliability of financial information is exacerbating the misallocation of capital that lies at the root of China’s waning economic efficiency and burgeoning levels of corporate debt. Consider, for instance, how a Chinese financial institution might try to find accurate information on a company that it is considering for a loan. As a first option, it might turn to media reports. This could turn out to be rash. The articles it finds may have been influenced by “envelope journalism