China Steps In to Rescue Stocks, But the Market Continues to Fall

The Communist Party uses a “national team” of state-owned investment funds to stem the market rout. But this time, investors are not sure it will work.

As investor pessimism pushed China’s stock market into a bear market last week, officials responded as they often do, deploying a group of state-owned funds to arrest the slide.

The group of Beijing-backed investment companies, known colloquially as the “national team,” pumped $6.8 billion into stocks in a single session last Thursday, providing a temporary reprieve to a market that had fallen for 11 straight weeks.

Mainland stocks are down more than 20 percent from a recent peak — the threshold for a bear market.

But this time, investors are signaling that the old playbook may not be enough. By Tuesday, markets fell again, declining 1.3 percent. Stocks in China are among the worst performers in Asia this year, along with Indonesia and India.

The intervention may have helped to “prop up the market,” said Shi Shusi, a financial commentator with 2.6 million followers on Chinese social media. But, he added, “it couldn’t prop up investors’ confidence.”

The effort to stabilize stocks came just days before Xi Jinping, China’s leader, convened one of the country’s most important political meetings of the year. Hundreds of the Communist Party’s most senior officials are meeting to set the government agenda. While economic policy has traditionally been a priority at such gatherings, many observers expect it to take a back seat to politics this year.

The market sell-off reflects a deeper unease about China’s economy and growing doubts about whether policymakers are doing enough to turn things around. China’s manufacturing juggernaut has powered a surge in exports, sustaining economic growth and helping Beijing meet its targets.

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