Chinese stocks rally as crackdowns ease

“China has shifted from driving global growth to driving global volatility,” OECD chief economist Laurence Boone tells Les Echos. The intergovernmental think tank thinks the country will grow by just 4.4% this year. “China is still suffering from the difficulty of moving from an economy centred on its exports to an economy more dependent on internal consumption.”

Investors in China have more immediate concerns. Listed tech firms have lost about $2trn in value over the past 12 months as regulators tighten the screws. Repeated Covid-19 lockdowns and growing geopolitical tensions have also darkened the mood. But now “some of the darkest clouds looming over the market show glimmers of parting”, says Reshma Kapadia in Barron’s. Regulators are said to be winding up a probe into ride-hailing service Didi, which was  launched last year after the firm defied authorities and listed in New York. That may also mean the end of a ban that has prevented it from signing up new users.

Foreign investors have been net sellers of Chinese stocks since March, but snapped up $5.5bn worth of equities listed in Shanghai and Shenzhen last week, says Hudson Lockett in the Financial Times. The CSI 300 benchmark has rallied 13% since a low early last month.

Still, signs of more market-friendly policies are not about soothing investors’ feelings, says Shuli Ren on Bloomberg. “The recent regulatory easing is most likely intended only to create jobs.” Tech, media and education firms are vital employers of recent graduates, a new batch of whom will join the job market in July. “The government’s many objections toward tech companies, from antitrust to data security, have not changed. Their business models are still on shaky ground.”