Shackled woman’s plight helps China find S in ESG

A Chinese demonstrator carries a Chinese flag during a rally in front of the Japanese Embassy to protest, after Tokyo allowed former Taiwanese president Lee Teng-hui to visit Japan in Beijing December 20, 2004. China and Japan enjoy one of the most vibrant economic relationships in the world, but their leaders just keep missing chances to improve their perennially frosty political ties, prompting analysts to ask: Are things beyond repair? REUTERS/Reinhard Krause pictures of the month December 2004 RKR/SH – RP5DRHXVAQAC

HONG KONG, Feb 18 (Reuters Breakingviews) – Uproar over alleged abuse of a Chinese woman is channelling unexpectedly into the country’s sustainable investing movement. A social media post about a mother of eight found chained in a shed attracted international headlines, but also stirred up the local online financial community. read more It’s a sign that investors are giving greater attention to the neglected S in ESG. read more

In late January, video footage surfaced of the woman, whose identity remains as unclear as her circumstances. The incident took place in Feng county, where gender imbalance is severe. The Xuzhou city government, according to its Weibo account, arrested the husband on grounds of wrongful detention and two others suspected of human trafficking. Contradictory reports from local authorities, who at first denied trafficking was involved, enraged the public. Attempts to censor the story only made matters worse.

The issue has moved into the financial realm, too. Ratingdog, a popular website covering Chinese fixed income run by Yao Yu, who also heads risk control for an investment firm in Shenzhen, went on the attack by highlighting debt issued by Feng county’s affiliated finance vehicles. The site’s followers went further: some vowed to stop buying Xuzhou’s bonds.

Other analysts have piled on, noting the county’s ratio of debt to fiscal revenue jumped to 373% in 2021 from 73% the previous year, excluding borrowing from ancillary funding mechanisms. Netizens are scouring lawsuits and generating charts and tables.

Feng county is a small target, but a broader movement by savvy ethical investors attempting to increase borrowing costs on the back of social issues could have a broader impact. Jiangsu, which is one of the top bond issuers in the country, has over 2 trillion yuan ($316 billion) in outstanding bonds, per Refinitiv. For that reason, Beijing will be wary.

The central government is already under pressure on feminism, a cause around which a national political movement might coalesce. If Ratingdog and its readers can move bond prices over human rights, it would be a display of private power over a problem the government is supposed to solve. Either way, it’s a good sign if Chinese investors start to take social issues more seriously alongside environmental and governance ones.

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CONTEXT NEWS

– A short viral video of a woman chained in an outdoor shed, which has attracted over 10 million views in a Weibo post on Jan. 28, has provoked outrage among Chinese citizens and prompted a criminal investigation. The video was purported to show the “positive energy” of an impoverished father living in a village in wealthy Jiangsu province.

– On Feb. 10, local authorities reported that the woman could be a victim of human trafficking, a finding that contradicted earlier official announcements that no trafficking was involved and that she was legally married to a man surnamed Dong with whom she had eight children.

Editing by Pete Sweeney and Katrina Hamlin

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