China must determine causes of Tianjin explosions, disclose info

The explosions sent up a blazing column higher than a tower building that tore through the area around the blasts. The crater left by the explosions is 100 meters across, illustrating the severity of the disaster. The explosions killed more than 100 people, the blast waves destroying the exteriors and windowpanes of buildings located more than two kilometres away from the site.

A large number of Japanese and other foreign-owned corporations operate in Tianjin. 

The impact of the latest disaster is serious, as illustrated by the fact that Toyota Motor Corp has been forced to shut down operations there. All tenants of a local Aeon Mall shopping centre have also suspended business. Swift restoration work is required.

Although the causes of the explosions are still unknown, one theory is that the massive blasts were triggered when fire-fighting teams sent to the site sprayed water on the chemical materials stored there. 

It has also been discovered that a massive amount of toxic substances were kept near the disaster site. There are fears that the health of the people living around the site may be harmed. 

Questions can be raised about the steps taken by the Chinese authorities to heighten their control of information. Alarmed by possible unrest, they are restricting independent news-reporting activities by the media while also strictly regulating the information released on the Internet. Even nearly one week after the disaster, no information has been disclosed about the developments leading up to the accident or the full extent of the damage caused.

Under these circumstances, it is difficult for Japanese-owned and other companies to make important decisions about their business management, including when to resume operations and which new suppliers to buy parts from. They will likely have difficulty bringing their economic activities back to normal, including the distribution of goods.

Foreign investment is indispensable for China’s economic growth and progress. If China is judged incapable of responding to accidents in line with internationally accepted standards, foreign capital is bound to recede from the country.

The same is also true of China’s policy management regarding its financial markets and other areas. Last week, the People’s Bank of China greatly reduced the value of the yuan against the US dollar. Admittedly, there is no denying China’s assertion that the yuan’s devaluation was intended to bring its value more in line with its prevailing market strength. However, China’s abrupt and sharp devaluation is fundamentally different from the practices of developed nations, which place an emphasis on dialogue with the market. Consequently, China’s latest action has shaken international markets due to speculation that its economy may have deteriorated so seriously that the country must shore up export activities through a desperate currency devaluation.

In July, China adopted strong-arm tactics for maintaining stock prices when prices dropped sharply in the Shanghai market and elsewhere at home. For instance, securities firms were urged to support buying of investment trusts.

This cannot be said to be in line with the international financial order built on the transparency of policies.

If it continues to implement self-serving monetary policies and information control, China will not be able to win the international trust befitting the world’s second-largest economy. It is important for China to keep implementing measures that follow international rules.