China’s economic woes deepen as investors remain skeptical of effectiveness of Xi Jinping’s 2015 playbook in addressing current market rout

The Chinese government’s efforts to stabilize the country’s stock market, which has suffered a $7 trillion slump, are proving ineffective. Investors are skeptical that Pres Xi Jinping they 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 stock market collapse, for example by targeting short sellers and freeing up liquidity for banks. However, these actions were not enough to address the deeper issues at play, Bloomberg reported Thursday.

China removed its market chief on Wednesday, Yi Huimanin a move that analysts say reflects a preference for tightening administrative controls rather than addressing the economy’s fundamental problems.

“The real reason it’s different this time is that the narrative around economic growth has changed,” he said Fang Rui, fund manager at Shanghai WuSheng Investment Management Partnership. “We are now at an inflection point not seen in decades.”

“The reshuffle demonstrates that the political impetus remains to tighten administrative controls rather than address the fundamental problems facing the economy,” Eurasia Group analysts wrote in a note after the surprise shake-up. Instead of helping, they wrote, “it reinforces the sense of discomfort and weighs on trust.”

Despite these measures, market turbulence persists, leading the public and investors to criticize Xi’s government. The looming Lunar New Year break is adding pressure to resolve the crisis, as millions of small investors prepare to meet their families.

See also: Jamie Raskin faces renewed ethics complaint for failing to disclose wife’s stock payday

“Market interventions cannot work over time unless the underlying factors are addressed,” he said Brock Silvers, CEO of private equity firm Kaiyuan Capital. “The latest policies all seem to treat the symptoms rather than the disease.”

Unlike 2015, China’s current economic slowdown is occurring amid a changed political landscape. The government is hesitant to rely on significant stimulus measures and top leaders have indicated a shift towards high-quality growth and away from the debt-fueled housing market.

Because matter: Recent market turmoil in China has been a cause for concern, with analysts warning that urgent action is needed to address the crisis. Despite promises of government support, the market crash continued, with small-cap stocks particularly hard hit.

The US Treasury Department is also sending a high-level delegation to Beijing to discuss China’s economic policies and practices amid significant economic instability in the country. A team of five senior officials from the US Treasury Department will meet with their Chinese counterparts this week. The main focus of the discussions will be China’s trade strategies, particularly its use of non-market economic practices and industrial overcapacity

Read next: Happy 20th, Facebook: If you invested $1,000 in Mark Zuckerberg’s social network when it went live 12 years ago, here’s how much you’d have had

Photo by Alexander Khitrov on Shutterstock

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