Every country has its media heroes, those who successfully fight the system against all odds. The smiling, energetic woman I spoke to in a small Chinese restaurant in Central could be a Chinese incarnation. She is the managing editor of Caijing, China's hardest hitting business magazine, and the inheritor of a long tradition of solitary protest against a system which often favours insiders.
In modern China, she and her team of 30 journalists represent a lone and often embattled voice in protecting China's 66 million retail investors against the widespread fraud and corruption which infest the Chinese stock markets.
Caijing appears twice a month with a circulation fluctuating between 50,000 and 100,000 and has an interesting pedigree. It's unusual position in the Chinese media stems from its affiliation with the SEEC, an institution heavily staffed by patriotic Chinese returnees who helped propagate ideas on the proper functioning of modern capital markets in China. One of the driving forces behind it is the idealistic Wang Boming, who caught the journalism bug when he studied at Columbia university in the US, and put himself through college with the proceeds of his freelance work.
Once back in China, Wang was reluctant to give up completely on journalism, even though he was heavily involved in an advisory and consulting role setting up China's fledgling stock markets.
As luck would have it, he met up Hu Shuli, an experienced journalist already but who shared Wang's vision of clean and efficient capital markets. Getting a publishing license is impossible for private individuals but getting one for Caijing was possible since it was a subsidiary of a state institution, theoretically a non-profit organization. Still, getting the license was an incredibly difficult affair recalls Hu, and necessitated copious relationship building with the China News Administration Bureau.
The result was worth it.
"We are quite a radical genre of media in China," comments Hu.
Chinese business journalists routinely receive payment for covering press conferences and writing nice things about the companies they cover. Caijing meets this challenge by providing salaries well above the going rate.
In contrast to China's mainstream 'feel good' media, Caijing prides itself on getting its hands dirty and peeling away the many levels of fraud and deception which damage both the reputation of China's stock markets and the wallets of its investors. Its most recent coups were a cover story revealing market manipulation among China' s fund managers in 2000 and a story which prompted the collapse of the share price of a privately-held Chinese company, Greencool Technologies. Caijing wrote an article expressing scepticism concerning the effectiveness of its 'revolutionary' environment- friendly cooling technology.
Joe Zhang, UBS Warburg's highly respected China analyst was later sued by Greencool for translating Caijing's piece and emailing it to investors and for giving the company the thumbs down following management's efforts to counter the charge at a press conference.
This was actually a brave decision by Zhang, since he had the guts to change his mind about a company he had earlier backed heavily as part of UBS's drive to raise the profile of China's private sector companies. In effect, he put the interests of investors above those of himself and the company he was covering.
While in western eyes Caijing plays a hugely important, and essentially market-friendly role, in striving to expose wrongdoing, this is not the way it is perceived by the powerful market interests in China. Fund managers, brokers and brokers profit enormously from the lax supervision and small free float of Chinese listed companies, which make it easy to manipulate share prices and cook the books.
"In China, some criticize us as being anti-market, and claim we are against the whole concept of capital markets," says Hu, staying admirably calm, "when in fact we are doing best to help the markets operate as effectively as possible."
China's stock markets have a special place in the dreams and aspirations of the Chinese: they are second only to working for the Bank of China or plundering the country's foreign exchange reserves as a way to unimagineable wealth.
"But there's also an incorrect perception in the West about the corruption levels of Chinese leaders," she adds.
"China is still a communist country. One should not simply interpret China's situation as if it were the same as in Suharto's Indonesia. In fact, the top leadership's worries about the new class of super rich individuals, who presumably have the power to damage the legitimacy of Communist Party rule, are not as profound as held by many in the West. That' s not the case at all." she says.
It's clearly a sensitive issue, and Hu does not expand her point. But some observers say the government is prepared to tolerate a certain amount of corruption from the new rich in the financial sector in return for their support of the status quo. On the other hand, the government must tread a fine line to ensure it does not lose legitimacy in the eyes of the population. And the concentration of wealth in China is not as blatantly centred around one family and a mass of relatives as it was in Suharto's Indonesia, Bhutto's Pakistan or Saudi Arabia.
When the markets tank as a result of stricter supervision, websites all over China blame the government for causing the slowdown, disingenuously claiming the CSRC and other regulators are not doing enough. But Hu says many of these messages are posted by disaffected vested interests who actually want to block reforms by showing the reform efforts in a bad light.
The relative weakness of the Chinese Securities and Regulatory Commission is due to the close connections between regulators and players during the creation of China's capital markets.
"On the one hand, the regulators had to protect the markets as an important part of liberalization, which meant joining up with the players to lobby the central government; on the other hand, this conflicted with the CSRC's role in monitoring conducts of the players, " points out Hu.
Hu denies that Caijing is protected by high-level reformers such as premier Zhu Rongji and other high level officials.
"I, for example, have a polite relationship with Zhou Xiaochuan who chairs the CSRC, but it's not a close one in fact, he even turned down my recent request for an interview," she says.
The CSRC is often under enormous pressure from the market players that Caijing is fighting against, she adds.
The latest attack on the cleaning up process of which Caijing is a spearhead came in subtle, linguistic form. Earlier this year, an economist at China's leading think tank, China Academy of Social Science used the term "hai gui pai", the "party returning from overseas", and implied that these returnees were responsible for the fall in China's stock markets as many of them, such as Zhou Xiao Chuan, Laura Cha and Anthony Neoh at the CSRC, are responsible for steming the flow of illegal company and bank funds which have to a large extent propped up the markets. According to this conspiracy theory, the returnees are intent on driving down share valuations to make it cheaper for foreign companies to invest following World Trade Organization liberalization.
"The term implies that the returnees are a coherent block, which utterly makes no sense," says Hu, " and denies the reality that we need the skills of these people who came back to help."
The term is banned from Caijing.
As we finish up lunch, Hu is already on the phone organizing the next story. From the sounds of it, another fraudulent company will soon be getting its comeuppance. There is certainly no lack of victims.
