Sorry, Italy, you're in China's seat

China's thought police have a new target in their sights: economists. The Communist Party's assault on cyberspace and the international media is well known. But now, it's turning on foreign researchers who dare challenge the official narrative that China can grow seven per cent forever and can't crash. That's the gist of a new effort detailed by the South China Morning Post, one that aims to discredit and blacklist overseas researchers. Expect the world's biggest banks to start self-censoring themselves to avoid upsetting Beijing.

Think about it. If Jamie Dimon's JPMorgan Chase & Co was willing to risk a scandal by hiring well-connected Chinese kids, what will it do if economists threaten its access to Beijing? That could happen simply by some strategist warning about the shadow-banking industry. Will those now voicing scepticism about Chinese data on everything from exports to bad loans to pollution be muzzled by top executives? If it's happening in the media, you can bet it's happening at banks.

It's a huge problem that the world's second-biggest economy is becoming more and more of a black box. What can the world do about it? To me, this is a job for the Group of Seven. It's time the US, Japan, Germany, France, the UK, Italy and Canada stepped out of their nostalgic cocoon and welcomed China into the ultimate members-only club.

China is the biggest trading nation, the largest holder of currency reserves ($3.8 trillion), the No. 1 polluter and a fast-rising geopolitical power. Yet, there's no regular or manageable forum in which peers can sit across from Chinese officials to glean intelligence on what's really afoot. It's vital for peers to be able to query Finance Minister Lou Jiwei on the true state of reforms and central bank Governor Zhou Xiaochuan on China's efforts to rein in a bad-loan crisis that could dwarf Japan's and form a united front against China's opacity.

Sure, these kinds of exchanges happen on a bilateral basis now and again and at meetings of the G20 nations. But the G20 is proving to be a bit too unwieldy for the task. It's also awash in nations from South Africa to Brazil to Indonesia that, frankly, might fear retribution if they demanded Chinese officials open their real books to the world.

The G-7 is a better forum for fact-finding and coordination. There are a couple of snags, of course. One is who to toss out. Sorry, Italy, but it's you. No disrespect is meant here. But you're part of a greater whole in Europe, shackled for better or worse to a single currency and central bank. Canada's economy may be smaller, but its success in avoiding the crises of recent years gives it more street cred in financial circles than Italy. The other problem is China might demur. It loves its role as huge shareholder in the global financial system, but it likes to avoid the whole stakeholder thing. Just as with efforts to curtail greenhouse gasses, China wants the benefits of its rising clout but hopes to put off the responsibilities that accompany it.

The G-7 should insist. The importance of China's economy is growing in sync with its opacity. Foreign journalists are finding Chinese travel visas hard to come by, never mind work permits. China's Internet censorship apparatus is growing apace to keep up with new microblogging and chat offerings. The government also has been working to help mainlanders doing business in Hong Kong conceal residential addresses and full identification numbers that journalists and analysts use elsewhere to discern who owns or runs what. Why open accounts in the Cayman Islands when those looking for places to stash ill-gotten gains can do it in Hong Kong? Going after researchers will further obscure China's outlook. When economists like Stephen Green of Standard Chartered Plc in Hong Kong say China's credit system is "a big black box, and it's quite scary," he's not exaggerating. My question is, What happens now as such comments might put economic truthers on Beijing's blacklist? Won't top executives at Standard & Poor's and Moody's Investors Service trying to sell ratings to Chinese companies and municipalities tell analysts to tread carefully when assessing debt risks?

Even before China's economist clampdown, Carson Block of Muddy Waters LLC was warning it had taken the side of fraud; former Fitch Ratings analyst Charlene Chu cautioned global risks emanating from Beijing; Pacific Investment Management Co.'s Bill Gross was calling China "mystery meat"; and George Soros was talking about a "debt disaster that's unfolding in plain sight." China will be even less transparent if economists are under pressure to be nice to Beijing. That is, unless the G-7 can talk China out of it. The only way to do that is to put out the welcome mat.

The author is a Bloomberg View columnist, Views expressed are his own