“China’s beaten-down stock market had its best day in more than two and a half years on Monday,” reports CNN: “The benchmark Shanghai Composite index surged more than 4% after a rare concerted intervention by senior officials to talk up the country’s struggling economy and markets.”
The “rare concerted intervention” began last week with expressions of confidence in the stock markets and the real economy from four key economic officials — Liú Hè 刘鹤, Guō Shùqīng 郭树清, Yì Gāng 易纲, and Liú Shìyú 刘士余.
Andrew Polk, co-founder of political and economic research house Trivium, tweeted that the foursome’s rare cheerleading “speaks volumes about how high the level of anxiety is right now.”
China's four most important economic officials — Liu He, Guo Shuqing, Yi Gang, Liu Shiyu — all out with statements today, projecting confidence in the economy and the stock market, on the back of GDP release.
Speaks volumes about how high the level of anxiety is right now. pic.twitter.com/S12Dx98xld
— andrew polk (@andrewpolk81) October 19, 2018
I tend to agree. Polk’s tweet reminds me of an old truism in China: You can only be sure something is actually happening when the government denies it.
Which is why this headline from CNBC on the stock market rally is perhaps a better summary of the real situation than CNN’s focus only on the good news: Chinese stocks surge, but looming uncertainties could drag markets down again. Even if the stock markets remain healthy after this propaganda-fueled bounce — I need hardly say — their performance is not a reliable indicator of the real economy.