In recent weeks, China’s economic policymaking has been not just inadequate but a little skittish. On January 23rd draft rules on video games disappeared from the regulator’s website a month after their appearance, as if they had never existed. The regulations, which would have sprinkled games with pop-up warnings against “irrational consumption behaviour”, had triggered a steep sell-off in the shares of tech companies like Tencent.
The following day, Pan Gongsheng, governor of China’s central bank, held an unusual press conference in which he cut reserve requirements for banks by more than expected, and vowed to “strive to stabilise the market”. It was an attempt to reassure investors after the bank had failed to cut interest rates earlier in the month.
Whereas other governments are used to being bullied by the markets, China’s prides itself on keeping finance in its place. These concessions to market sentiment were therefore notable. They were not, however, very effective. Data on January 31st showed a slowdown in construction and unremitting declines in manufacturing prices. China’s stockmarkets fell again, returning to levels reached before Mr Pan spoke. According to Bloomberg, the stockmarkets of mainland China and Hong Kong have lost over $1trn in value this year.
China’s policy inconsistency has thus been expensive. And there are other examples. The central government has, for instance, ordered 12 provinces and cities to halt infrastructure projects, according to Reuters. Its worries about wasteful behaviour are understandable. But such strictures will make it all the harder for China’s government to provide the fiscal easing required to revive confidence and growth.