Over the weekend The Financial Times reported on recent articles in Chinese official media that sharply criticize Goldman Sachs:
“Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US,” read the opening lines of an article in the China Youth Daily, a state-owned daily newspaper, last week.
The article was widely distributed through commercial news portals and the websites of government mouthpiece Xinhua News and the People’s Daily, the Communist Party publication.
Referring to Goldman as a “black hand” that “played little tricks carefully designed to gamble with Chinese enterprises”, the article made few specific accusations of wrongdoing by the bank.
The report followed similar commentary and articles published in publications including the 21st Century Business Herald, one of the largest financial newspapers in the country, and New Century Weekly, a liberal magazine.
The reports were highly critical of Goldman for designing and selling oil hedging contracts to state-owned Chinese companies that then lost billions of dollars when oil prices plunged, contrary to Goldman analysts’ predictions, in 2008 and 2009.
Probably the most telling assertion in all of the articles is the complaint that Goldman has been too successful in China, that it has made too much money from underwriting initial public offerings, arranging deals and making its own private equity investments.
The first article I saw appeared in the April 30 edition of the 21st Century Business Herald-???????“??”??. The most recent one first appeared in the May 31 edition of China Youth Daily and then was widely reprinted-??????????. And in late April I wrote about Goldman’s reputation in China and the possible impact it may have on government hiring of Goldman alums-As Goldman Sach’s Reputation Sinks, Will The Chinese Government Hire Goldman Alumni?
Does the Goldman-bashing in the Chinese press signal a policy change towards Goldman Sachs, or is it more the grousing of domestic competitors and customers/victims? As someone who is very familiar Goldman Sachs in China pointed out to me, if the children of powerful people stop taking jobs at Goldman then we will know that attitudes really have changed. Otherwise, this is probably just venting and business will go on as usual for Goldman in China.