The aforementioned image discussed the potential reopening of China's economy and was initially shared in WeChat social messaging groups that were populated with analysts and fund managers. However, the source of the image and its authenticity remain uncertain. Despite this, traders were quick to purchase stocks for two consecutive days after the image surfaced. The image claimed that Wang Huning, China's fourth-ranking official and one of the seven members of the powerful Politburo Standing Committee, held a meeting of Covid-19 experts on Sunday at the request of President Xi Jinping, referred to as "big boss" in the image. The meeting reportedly included representatives from the economic and propaganda departments, who discussed a conditional reopening plan aimed at substantially opening the economy by March 2023.
Rumors of China Reopening Plan Fuel $450 Billion Stock Rally
The image gained significant attention after it was shared on Xueqiu, a Chinese-language financial platform, by "96 Old Stock Trader" and was subsequently tweeted by Hong Hao, a prominent Hong Kong-based economist. These actions led to a $320 billion rally in the MSCI China Index, with further gains on Wednesday bringing the two-day total to $450 billion. The Chinese stock market has struggled this year, with lockdowns, weak consumption, and a declining housing sector contributing to a lack of investor confidence. However, the hope of potential economic stimulus measures being announced at China's legislature session in March has boosted investors' confidence.
The episode highlights the challenges of obtaining reliable information in China's opaque political system, with internal government deliberations and leadership changes closely guarded secrets. Thus, significant policy shifts can often leak out in unusual ways, even if they cannot be immediately verified. Despite the attention that the image has garnered, China's official response has been one of silence, with state media ignoring the rumors for the past two days. Furthermore, when asked about the rumors during a regular press conference, China's Foreign Ministry claimed they were unaware of them, and any questions on the topic were removed from the briefing's official transcript.
Despite the lack of transparency and restricted press freedom, Chinese officials have advised international investors to be cautious when interpreting international media reports on China's economy. Fang Xinghai, a vice chairman of the China Securities Regulatory Commission, stated that media reports often do not fully understand China's complex economic situation and advised investors to investigate the country's economic conditions for themselves.