The National Development and Reform Commission of the People’s Republic of China held a press conference yesterday morning without the expected “comprehensive incremental policy package,” causing market doubts. In the afternoon, Premier Li Keqiang’s expert roundtable meeting was urging for quick solutions to boost the economy.
At the same time, the A-share market performed below expectations yesterday, with all three major indexes seeing increased declines today. Hong Kong media experienced continuous downturn following a major drop, and Chinese concept stocks ETF in the US dropped by 10% yesterday. Experts believe that the Chinese stock market is on the brink of collapse as there are no signs of economic improvement, the market lacks a fundamental source of momentum, and the CCP is merely delaying the crisis.
On October 8, Premier Li Keqiang chaired an economic situation expert and entrepreneur roundtable meeting, emphasizing the swift implementation of the recently introduced “comprehensive incremental policy package” and the need for concrete proposals for the policies under consideration.
According to CCTV news of the CCP, experts and entrepreneurs attending the roundtable meeting included Luo Zhiheng, Zhou Qiren, Huang Yu, Zhang Ming, Zhang Shuili, You Wei, Zhou Yong, and Zuo Ding, who spoke in succession.
Professor Xie Tian from the Darla Moore School of Business at the University of South Carolina told Epoch Times that the CCP indeed has no solutions.
“The so-called prompt release of detailed policies by Li Keqiang is likely just a bluff; it’s unlikely to yield anything tangible. If there were any, they should have been introduced six months or a year ago. Now they are hoping to pull money from people’s savings, which only shows how severe the economic situation is.”
Chinese affairs expert Wang He told Epoch Times that during the Politburo meeting on September 26, while they discussed the Chinese economic situation, no specific economic decisions were made. Without a clear understanding of the economic development, there are no systematic stimulus plans in place. It also indicates potential internal conflicts within the CCP.
“Why can’t they come up with anything? There are intense political divisions within the CCP, fierce struggles between the central and local levels, and mutual blame among various ministries of the State Council. China’s economy is now caught between a rock and a hard place. Although they talk tough, claiming stability and progress, the economy is actually facing a collapse. They are at a loss on the way forward, lacking the determination to act decisively. Thus, they are implementing a strategy of delay: a temporary stimulation followed by procrastination.”
The National Development and Reform Commission of the CCP held a press conference yesterday morning and previously announced a set of incremental policies to counter downward economic pressure. It was originally expected that the press conference would feature a “one leader, four deputies” configuration and further positive policy announcements, but no specific measures were disclosed, leading to skepticism.
Xie Tian told Epoch Times that the CCP authorities merely point out the direction without having any substantive measures in place for the real economy. They are aiming to attract various funds and prop up the stock market.
“The despicable aspect of the CCP is that the government is aggressively implementing stimulative policies, and the media, state-owned enterprises, and securities companies are all mobilized, just like the market manipulation in 2015. They are lifting the stock market to target the Chinese people’s savings of trillions of yuan. Chinese people have the mentality of getting rich quickly. When the government announces policies, many still fall for it.”
Wang He stated that on September 24, the authorities introduced a series of policies focused on supporting the real estate and stock markets, causing a significant rise in the Chinese stock market from below 2700 points to 3600 points. However, to maintain this, there must be follow-up policies. Yet, the released news from the National Development and Reform Commission consisted of empty words and slogans, making people wonder if they are being misled again. Without the support of subsequent policies, the Chinese stock market is certain to collapse soon.
The implementation of new fiscal stimulus measures falls within the scope of the Ministry of Finance of the State Council, and the head of the National Development and Reform Commission, Zheng Zhujie, is considered to belong to the He Lifeng faction, who oversees the stock market. However, during this critical period to restore confidence, while Li Keqiang convened an expert meeting for solutions, He Lifeng was in Xinjiang to congratulate the 70th anniversary of the construction corps.
Xinhua News Agency reported that on the 8th, He Lifeng, a member of the Political Bureau of the CCP Central Committee, Vice Premier, and head of the Central Delegation, led a delegation to visit the Ninth Division of the Xinjiang Production and Construction Corps in Baiyang City and the First Division in Aral City for condolences and research.
On the same day, CCTV reported that the only deputy state council official present at the expert roundtable meeting chaired by Li Keqiang was State Councilor and Secretary General Wu Zhenglong.
Wang He remarked that according to CCP conventions, in meetings led by Premier Li Keqiang, Vice Premier Liu He would be present, and sometimes even Executive Vice Premier Han Zheng would attend.
“Given the importance of the meeting chaired by Li Keqiang and He Lifeng’s absence, it indicates that Li Keqiang cannot control He Lifeng in economic matters. There seems to be a problem with the internal power balance within the CCP.”
Wang He stated that Li Keqiang lacks central working experience, while He Lifeng, the former head of the National Development and Reform Commission, now Vice Premier, does not regard Li Keqiang in economic matters. Therefore, within the State Council, the antagonism between the two has led to mutual undermining.
“The State Council has already been stripped of power by Xi Jinping, lacking authority. Coupled with the internal conflict between Li Keqiang and He Lifeng within the State Council, the Political Bureau issues empty statements, failing to formulate precise economic decisions, highlighting serious flaws in the system.”
Wang He said that historically, the core of economic management in China has resided in the State Council, but now Xi Jinping has turned the State Council into a secretarial team, greatly reducing its economic decision-making authority. Therefore, Xi Jinping should bear the primary responsibility for the current economic predicament.
Xie Tian stated that in reality, China’s economy is directly controlled by Xi Jinping, whether it’s Li Keqiang, the National Development and Reform Commission, they all act on his behalf. This current aggressive move by the CCP is entirely directed and commanded by Xi Jinping.
The Chinese stock market resumed trading on October 8, but the anticipated “open and hitting the price ceiling” scenario did not occur. As of the morning of October 9, the three major A-share indexes saw increased declines, with the Shanghai Composite down by 6.29% to 3270.3 points, the Shenzhen Component down by 7.89% to 10588.62 points, and the ChiNext Index down by 10.1% to 2292.79 points, with over 5000 individual stocks across the three markets experiencing declines.
New investors expressed frustrations on social media, with some lamenting not having the chance to make profits before the market downturn. Others revealed how, just before the National Day holiday, family members invested their savings in stocks, only to incur significant losses amid the recent fluctuations, nearing nearly 30,000 yuan in losses.
While the Chinese stock market continued to rise, there was a net outflow of 169.8 billion yuan throughout the day on October 8. As reported by Sina Weibo, since the A-share market surged at the end of September, over a hundred companies have announced plans to reduce their holdings. On October 8 alone, more than 30 listed companies made such announcements.
The Hong Kong stock market exhibited weakness yesterday, closing nearly 10% lower. Today (October 9), the Hong Kong market experienced fluctuating trends. By midday break, the Hang Seng Index had fallen by 291 points to 20635 points, a decrease of 1.39%.
Xie Tian noted that the response of the Hong Kong stock market is genuine. The rush of large investors and the so-called “national teams” to sell indicates their pessimism about the future, signaling the imminent awakening of retail investors and an inevitable wave of massive selling.
The US-listed Chinese concept stocks ETF plunged by 10% yesterday. Goldman Sachs noted that the market rescue measures by the National Development and Reform Commission lacked surprises, disappointing investors.
Bloomberg published an article yesterday stating that the surge in Chinese stocks, the strongest in a decade, stemmed from despair. However, if it encounters mere rhetoric, it could quickly dissipate. Could the collapse of the Chinese economy become a reality?
Xie Tian told Epoch Times that international capitals, especially foreign brokerages, have indeed started selling off, perceiving the CCP’s desperate gamble as an end-of-days celebration. The CCP’s all-in move resembles a dying gasp. He estimated that the Chinese stock market might collapse in a matter of weeks at the soonest or perhaps several months at the longest, by the end of this year or early next year.
“The supporting factors for the Chinese stock market from the real economy are non-existent: unemployment problems remain unsolved, no improvement in imports and exports, and people are refraining from spending money. Many Chinese automakers are deceiving subsidies, producing blindly, while European and American countries have begun halting the new productive forces of the CCP. The source of stock momentum simply does not exist. So, the duration of this bubble depends on how long the CCP can sustain it.”
The World Bank issued a report yesterday warning that next year China’s economic growth may further decelerate, suggesting that while the recent fiscal support package introduced by the CCP authorities may boost short-term growth, long-term growth will depend on deeper structural reforms.
Wang He remarked that regarding international research on China’s economy, the assessments of the CCP’s economic policy capacity are not optimistic. The CCP can only rely on the temporary and false reaction of stock market rallies to buy time while delaying the eruption of the economic collapse crisis as much as possible.