Editorial | Key China committee counters uncertainty in message to markets
- Reversal of stocks rout comes after panel headed by Vice-Premier Liu He provides reassurance on policy and regulation
Almost as soon as China announced a growth target this year of 5.5 per cent it looked optimistic given market conditions. And that is without factoring in the latest Covid-19 outbreak and the war in Ukraine.
A markets rout over the past two weeks reflected a gloomier scenario. It formed the backdrop to a key session of the Financial Stability and Development Committee this week chaired by Vice-Premier Liu He, China’s economic tsar.
The meeting was not merely a reaction to the sell-off, even if that gave it a sense of urgency, but it sent out reassuring messages about policy and regulation that had an immediate positive impact on markets.
President Xi Jinping set up the committee in 2017 after the 2015 market plunge to ensure financial stability. It oversees banking, securities and insurance regulators.
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An unprecedented wave of rising uncertainties at home and abroad have put it to the test. To maintain confidence Beijing needs to clarify its policy directions to counter uncertainty, otherwise this will not only affect the financial markets but also the economy.
Liu told the meeting the government would make sure any new rule that could have a significant impact on capital markets was coordinated in advance among regulators.