You can’t buck the market, the late U.K. Prime Minister Margaret Thatcher famously said. In a different context, U.S. heavyweight boxer Mike Tyson observed that everyone has a plan until they get punched in the mouth. Both were expressing variations of the same principle. Faced with an unopposable force, the only course is to capitulate. And that’s what China’s government just did.
The flurry of assurances emanating from the country’s top financial policy committee Wednesday go beyond the standard official response to a market in freefall: They amount to a significant change in direction. After more than 18 months of pursuing a program that placed the Communist Party’s political objectives ahead of the concerns of investors, the tone has abruptly shifted. China supports overseas listings; the “rectification” of internet platform companies will be wound up soon and regulation will henceforth be transparent and predictable; the imploding real estate sector will get support; policies will be market-friendly and look to safeguard stability.
