Analysis-China's attempts to lift confidence in economy fall flat
By Joe Cash
BEIJING (Reuters) — Chinese Premier Li Qiang went to the World Economic Forum in Davos last week with a mission to present a positive image of the economy and schmooze financial elites: «Investing in the Chinese market is not a risk, but an opportunity.»
The message fell flat.
As soon as Chinese markets reopened the next day, a years-long sell-off in stocks and other assets accelerated, even as official data confirmed Li's surprising early reveal that economic growth comfortably hit last year's target.
«The news was not the data. It was Li Qiang in Davos,» said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis. «It was really underwhelming and bewildering. It doesn't show confidence.»
«To just give a number that everybody was expecting… it’s bewildering. Was there anything else?»
What markets were looking for was a clear roadmap for how China planned to resolve a deepening property crisis and a local government debt crunch, and how it plans to address a debt-fuelling imbalance of low consumption and high investment.
The disconnect between the positive official messaging and the concerns that nervous investors and penny-pinching Chinese citizens are raising over the economy is growing.
Analysts warn China's struggle to get its message across to the broader public fuels uncertainty in the decision-making process at the top and risks eroding market and consumer confidence further.
Alfred Wu, associate professor at Lee Kuan Yew School of Public Policy in Singapore, says one of the root causes is the concentration of power in President Xi Jinping's third term, which creates hesitation at lower levels in making policy choices, as well as communicating with the public.
«The information flow through
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