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China’s slow response to economic turbulence leaves market bewildered: ‘Where do we go from here’ as policy changes remain elusive?
- As markets tank, investors and the Chinese public are pining for concrete actions and stimulus measures from Beijing that haven’t come
- Some analysts suggest that stock market fixes may not be as important as ensuring social stability, but worries are rising that shocks could force Beijing’s hand
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Beijing’s response to what has been a worrisome raft of economic headwinds – including a widely watched stock market slump that has slammed investor confidence – highlights what analysts say is a failure to manage market expectations at a time when doing so is a critical step toward getting China’s economy back on solid footing.
To stem the tide of negative sentiment and ward off financial peril, observers warn that Chinese leadership is being hard-pressed to change tactics by employing substantial stimulus measures or more impactful policy reforms.
“It’s largely an issue of confidence,” said He Jun, a senior analyst with Beijing-based public policy consultancy Anbound, pointing to the plunge in China’s capital markets this week.
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“There are lots of economic issues in China. But governments tend to react only after shocks have been generated.”
05:39
Hong Kong stock market falls below 15,000 level, its lowest in 15 months
Hong Kong stock market falls below 15,000 level, its lowest in 15 months
In the meantime, critical questions remain unanswered, such as how China can ensure sustainable economic growth – perhaps another 5 per cent in 2024 – in the face of colossal debt piles, a property sector crisis, and worries among consumers who cannot find work or are more inclined to hoard money rather than boost consumption.
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