1 week Ago By Moneycontrol
After Donald Trump’s steep “liberation day” tariffs triggered a sharp sell-off in Chinese equities, Beijing launched a coordinated financial rescue effort to stabilise the market. Key state institutions—led by sovereign wealth fund Central Huijin—declared themselves part of the “national team,” a term for government-backed entities tasked with propping up the stock market during periods of extreme volatility, the Financial Times reported. Central Huijin, China Chengtong Holdings, and China Reform Holdings collectively pledged over RMB 180 billion (approximately $24 billion) to boost equity investments, while the National Council for the Social Security Fund also joined the effort.
Additionally, Chinese regulators relaxed rules to enable insurance firms to increase stock purchases. Buybacks and ETFs form the backbone of response Over 100 of China’s largest listed companies, including Sinopec, China Mobile, and luxury spirit brand Moutai, announced share buyback programs as part of the state-directed push. The CSI 300 index, which had plunged 7% on Monday, rebounded on Tuesday as state-directed funds and company repurchases began flowing into the market.
Goldman Sachs estimated that the “national team” purchased RMB 740 billion worth of A-shares in 2024 alone, with over RMB 170 billion entering exchange-traded funds (ETFs) in just the first two days of the week. Central Huijin’s rare public use of the term “guojia dui” underscored the seriousness of the effort, as did its framing as a “stabilisation fund” optimistic about China’s long-term economic outlook. Stock market now central to stimulus efforts The Chinese stock market has become a vital component of Beijing’s economic stimulus playbook.
With the real estate sector still dragging on growth and consumer confidence weak, officials are now tying corporate key performance indicators (KPIs) to investor returns and urging public and private firms to engage in repurchases. Regional regulators, such as those in Zhejiang province, are also convening local state-owned enterprises to coordinate efforts. UBS strategist Jason Bedford noted that this marks an intensified focus on shareholder outcomes as part of China’s broader policy shift.
According to Meng Lei of UBS Securities, this is not just a financial intervention but a psychological one, aimed at setting market expectations that the government will not let equities collapse amid external shocks. Monetary stimulus may follow fiscal support Alongside the equity market push, analysts expect more traditional stimulus measures to be introduced in the coming weeks. Nomura’s chief China economist Ting Lu said “high-profile” interest rate cuts may arrive sooner than anticipated, with broader financial easing likely to follow as GDP targets come under strain from Trump’s 125% tariff on Chinese goods.
Goldman Sachs’ China equity strategist Kinger Lau said that while some investors view state market interventions with scepticism, they remain effective. “Historically many markets have done that,” he said. “This time, the Chinese government is making it clear they’ll put a floor under the market.
” A stabilising pause—but uncertainty looms Though the CSI 300 ended Wednesday up 1%, the road ahead remains uncertain. With no talks scheduled between Beijing and Washington, and the US leaving China out of its 90-day global tariff pause, markets may continue to sway with policy pronouncements. Still, Beijing’s rapid mobilisation of its financial arsenal signals its determination to control the fallout—both economic and political—of Trump’s aggressive trade agenda.
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