The government has really messed up almost anything they did on the financial markets, says financial analyst Arthur Kroeber on NPR. Internal divisions between different factions did not help to make sound financial decisions.
“In the stock market case, I think the government was really incompetent on several levels because they were actively promoting something that was really bad economically,” says Arthur Kroeber, the head of research at Gavekal Dragonomics, a Beijing-based economics research firm….
Kroeber says when stocks went south, the government lost its way.
“They first encouraged an irrational bubble,” he says. “Then they tried, unreasonably, to protect the market from the consequences of its own excesses. And then, having done that for two months, they kind of gave up.”
When the government devalued China’s currency earlier this month, its performance was no better.
Officials didn’t immediately spell out their motives — sparking fears that China’s economy was in worse shape than it appeared….
Why has the government made missteps this summer and struggled to manage its message?
For one thing, it’s harder and harder to control information in the information age — even in authoritarian China.
But there is another reason, Kroeber says: Government officials are at odds on how to handle the economy and slowing growth.
“There is very clearly a deep division within the government about how much structural economic reform needs to be done, and this is not a debate that has been clearly decided from one side or the other,” he says. “So when you look at it from the outside, it looks like confusion.”
Are you interested in more stories by Arthur Kroeber? Check out this list.