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BREAKING NEWS: Did "Pure Fabrication" Move The Yuan Market?

By Dan Harris and Steve Dickinson

The internet is abuzz with recent news that Chris Devonshire-Ellis of China Briefing may have influenced movement in the Yuan-Dollar conversion rate by what is being described by Chinese governmental authorities on the China Banking Regulatory Commission website as a "pure fabrication:" To summarize, China Briefing Magazine did a post claiming to have interviewed a Chinese governmental official who talked of the Yuan weakening to around CNY6.9-CNY7.0 against the dollar. The Chinese government subsequently went on record denying this and even appearing to deny any such interview took place Or as stated by The Wall Street Journal in its initial story:

In a China Briefing story Wednesday, China Banking Regulatory Commission Chairman Liu Mingkang was quoted as saying the yuan may weaken to around CNY6.9-CNY7.0 against the U.S. dollar. The CBRC denied its chairman had been interviewed by China Briefing. Later Wednesday, China Briefing issued a clarification on its Web site, backing away from attributing specific dollar-yuan levels to any government officials. The author of the reports, Chris Devonshire-Ellis, told Dow Jones Newswires that specific levels came up during discussions with government officials, but he declined to say who made the comments.

The China Banking and Regulatory Commission has issued its own statement, appearing to deny such an interview ever took place and calling news of it a "pure fabrication:"

The CBRC Statement The website CHINA-BRIEFING published an article on Feb 18, 2009 with CBRC Chairman?s photo and opinions. The CBRC hereby makes the statement that no CBRC officials have been interviewed by this media or by the author of this article. This news is a pure fabrication.

A Reuters news service article seems to say China Briefing itself is no longer certain who exactly it interviewed:

China Briefing magazine first attributed the comments to National Development and Reform Commission deputy head Zhang Xiaoqiang but later issued a correction, saying they were by Liu Mingkang, head of the China Banking Regulatory Commission.

My in-box has been filled with all sorts of good questions, the answers to which I do not know: 1. Assuming the alleged interview regarding the Yuan rate never occurred at all, might those who lost money on the fluctuations have a cause of action against China Briefing for having claimed to have conducted it? 2. Assuming the alleged statement regarding the Yuan-dollar conversion was never given to China Briefing, but that China Briefing merely made an "error in transcript and translation," might those who lost money on the fluctuations have a cause of action against China Briefing? 3. Might there be criminal liability, particularly if it is later determined that this news was spread intentionally so as to influence the market? For more on this, check out the following post at Fear of a Red Planet:"I believe this is called "self-pwnage" : Chris Devonshire-Ellis interview with CBRC Chairman "'pure fabrication.'" There are a number of very basic lessons to be learned from all this:

1. Tell the truth. 2. If you are going to report on a conversation with a Chinese government official, make sure you have permission to do so; if you do not have permission, do not make any attributions to a particular person and keep the statements at least somewhat vague. 3. If you are going to issue a story with such clear potential to move markets, make sure you have your facts straight before doing so. 4. If you are going to issue a story with so much potential to move markets and then your facts get questioned, hire a top level PR agency.

Readers, what do you think? As many of you know, Chris Devonshire-Ellis is a very controversial figure with a real tendency to try to shut down those posts he does not like (see here, here, here, and here). I do not wish to be subject to another Chris Devonshire-Ellis onslaught so I ask that those who comment stick to the main issues and not make personal attacks or accusations, requiring us to edit or delete.

Full post as published by China Law Blog on February 18, 2009 (boomark / email).