Controlling the Media’s Narrative: The Coordination and Disciplining Role of the People’s Daily in China
In this paper, we document that politicians in China use the Chinese Communist Party’s flagship newspaper, the People’s Daily, to coordinate the reporting of corporate news in China. We posit, and find, that the People’s Daily is more likely to publish an article about a firm when there is substantial disagreement in the sentiment of recent domestic news articles about that company, ceteris paribus. This relation is stronger if these recent articles are published in commercially-oriented newspapers and during periods of heightened political sensitivity. More importantly, People’s Daily guidance systematically shapes subsequent news reporting. Upward guidance is followed by an increase in the sentiment of subsequent articles, a reduction in sentiment disagreement, and greater textual alignment, consistent with subsequent reporting implicitly anchoring their articles upon the People’s Daily message. Downward guidance is followed by a decrease in the sentiment of subsequent articles, but generates greater disagreement in sentiment, suggestive that unfavorable People’s Daily coverage signals the Party’s openness towards a critical review of the covered firm, with the change strongest among China’s official newspapers. Lastly, the influence of People’s Daily guidance on subsequent reporting intensified after President Xi’s highly visible state media visit (in 2016) highlighted and reinforced the media’s responsibility to serve the Party.