The Chinese government’s efforts to stabilize the country’s stock market, which has seen a $7 trillion rout, are proving ineffective. Investors are skeptical that President Xi Jinping can use the same strategies that worked in 2015 to address the current market crisis.
What Happened: The Chinese government has taken emergency measures to support the plunging stock market, such as targeting short-sellers and freeing up cash for banks. However, these actions have not been sufficient to address the deeper issues at play, Bloomberg reported on Thursday.
On Wednesday, China removed its market chief, Yi Huiman, in a move that analysts say reflects a preference for tightening administrative controls over addressing the economy’s fundamental problems.
“The real reason why this time is different is the narrative for economic growth has changed,” said Fang Rui, fund manager at Shanghai WuSheng Investment Management Partnership. “We are now at an inflection point unseen in the past decades.”
“The shuffle demonstrates that the political impulse remains to tighten administrative controls rather than address fundamental problems facing the economy,” Eurasia Group analysts wrote in a note after the surprise shake-up. Rather than helping, they wrote, “it entrenches the sense of malaise and weighs on confidence.”
Despite these …