Stock indexes in China closed up again on Tuesday, a day after President Xi Jinxing arrived in the United States for a weeklong trip.
Both the CSI300 index of major companies listed on the Shanghai and Shenzhen exchanges and the Shanghai Composite Index were up nearly one percent, while the country’s volatility index has fallen to 40 percent.
That measure of volatility reached a high of 65 percent in August, in the middle of market turmoil that saw share prices crater amid fears of a bubble and a weakening Chinese economy.
Those fears led to a surprisingly dramatic intervention by the government in Beijing. The moves stirred controversy, coming after decades of economic opening in China. But Xi, speaking to the Wall Street Journal this week, brushed off concerns by comparing his government’s actions to those of governments in “some mature foreign markets” as a necessary stabilization policy.
Xi will meet with executives from American companies including Apple and Microsoft during his trip to Seattle this week, before arriving in Washington, D.C., for an official state visit with President Obama.
“Any ship, however large, may occasionally get unstable sailing on the high sea,” Xi told the WSJ on the topic of China’s economic volatility.
Xi is considered to be one of the most powerful Chinese leaders in generations, thanks to his strident efforts to consolidate authority and eliminate corruption since taking office almost three years ago.
But that image of strength was shaken during this summer’s economic troubles. Xi’s heavy-handed approach was at odds with years of official policy moving the government away from directing China’s economy. It also seemed to undermine the surety with which Xi handled everything else – and the confidence with which he and other officials had addressed economic issues in the past few years.
“A lot of people are now sitting back and saying, ‘Maybe this operation isn’t as well wired as we thought it was,’” Robert L. Suettinger, of the Stimson center in Washington, told the New York Times.
It remains to be seen whether this week’s market reversal signals a move toward stability or is just a blip on the way down. Other markets in Asia have fallen this week thanks to uncertainty over the situation in China as well as the Federal Reserve’s decision-making on interest rates.
U.S. markets fell after the Fed declined to increase rates when officials met last Thursday, but closed up slightly on Monday.