China’s leaders are flailing as markets drop

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run out of money. Some economists therefore think that the central government will need to set up a fund to take over unfinished projects or guarantee property prepayments, much as bank deposits are guaranteed. It is also unclear how much fiscal stimulus the central government is prepared to provide.

In October, when it increased its budget-deficit target and said it would issue an extra 1trn-yuan-worth ($140bn) of bonds in its own name, it was possible to believe that a signal was being sent. After years of relying on local governments to prop up the economy, the central government was now willing to use its stronger balance-sheet to put a floor under growth. Since then, the central government has been slow to spend the 1trn yuan.

At the World Economic Forum in Davos, Li Qiang, China’s prime minister, boasted about how little stimulus China had required. In March he will reveal the official growth target, budget deficit and bond quotas for the rest of this year. Perhaps the government will be ambitious.

Yet with markets falling, March seems a long time away. Although stockholdings do not represent a big share of household wealth in China, and equity issuance contributes a small share of corporate financing, the confidence of consumers, homebuyers and entrepreneurs is crucial to the country’s recovery. Spirits are unlikely to revive if the market continues to deliver such a grim verdict on the economy’s prospects.

Mr Pan, Mr Li and He Lifeng, China’s economic tsar, have all stressed the importance of a stable stockmarket in recent days. But their words alone have not impressed investors. One image circulating online shows a case full of horns, trumpets and other blowhard instruments.