Could State-Controlled Media Stabilize the Market during the U.S.-China Trade Frictions?

Wenjia Zhang and Julan Du

Credit and Capital Markets – Kredit und Kapital, 2022, vol. 55, issue 2, 153-201

Abstract: The China-U.S. trade frictions brought about many uncertainties to the Chinese economy. This research investigates whether China’s state-controlled media played a role in stabilizing investors’ expectations by examining the relations between media tone and Chinese stock market reactions in the context of China-U.S. trade frictions. Firstly, even though the media tone of news on trade frictions did not elicit significant reactions at the market level, those firms heavily exposed to export business with the U.S. produced significant positive reactions to a high media tone of the state media. Secondly, investors, especially SME investors, perceived more uncertainties to the high tones of Chinese media in the early days of Trump’s presidency and reacted negatively to the media’s high stance, as shown in the volatility. Thirdly, after the war was initiated, higher-tone news released from the state-controlled press eased people’s anxieties and stabilized the market, especially for the large caps, leading to lower volatilities in most subsequent stages. Generally, the official media’s tone manipulation is partially effective in preventing a market meltdown and easing investors’ worries.

Keywords: State-controlled media; Media tone; U.S.-China Trade Frictions (search for similar items in EconPapers)
JEL-codes: E44 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.3790/ccm.55.2.153 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dah:aeqccm:v55_y2022_i2_q2_p153-201

Ordering information: This journal article can be ordered from
https://www.duncker-humblot.de/zeitschriften/ccm

Access Statistics for this article

Credit and Capital Markets – Kredit und Kapital is currently edited by Hans-Peter Burghof, Hendrik Hakenes and Ulrike Neyer

More articles in Credit and Capital Markets – Kredit und Kapital from Duncker & Humblot, Berlin
Bibliographic data for series maintained by E-Publishing-Team ().