Shanghai and Shenzhen jump more than 4% after President Xi Jinping and Vice-Premier Liu He roll out an action plan
It is all about restoring confidence. In the past 48 hours, President Xi Jinping and his economic tsar Liu He have again outlined plans to shore up China’s slowing economy and embattled equity markets, which have been ravished by the United States trade war.
On Monday, it appeared to work.
Shanghai and Shenzhen jumped more than 4% after Friday’s significant gains with government-backed funds, known as the National Team, reportedly pumping in liquidity.
Before the two-day rally, mainland markets had fallen to levels not seen since 2015 with nearly $3 trillion wiped off the Shanghai Composite Index in the past nine months.
“You see a rebound today, but does it mean that the markets have turned a corner? I’m not sure. I don’t think so,” Vasu Menon, the vice-president of group wealth management at OCBC Bank, which is based in Singapore, said.
During a flurry of activity at the weekend, Xi again waded into the row regarding the slowdown in pro-business policies, which have helped transform the country.
Published on Sunday by the government’s official news agency Xinhua, the president’s open letter to the private sector was succinct and “unwavering.”
“Any words or acts to negate or weaken the private economy are wrong,” he wrote. “It is always a policy of the Central Committee of the Communist Party to support private business development, and this will be unwavering.”
It was the second time in less than a month that Xi had offered comforting words to private businesses after making a similar speech during a visit to China National Petroleum Corporation, one of the ‘big beasts’ of the state-owned enterprise jungle.
Yet during that trip, he also called for a strong SOE sector, which tends to hog investment from China’s leading banks and government agencies.
“Such statements [as] there should be no state-owned enterprises [and] we should have smaller-scale state-owned enterprises are wrong and slanted,” Xi told China’s state-run media at the time.
In the past few months, there have been concerns about China’s lack of progress in economic liberalization.