Why Chinese stocks may have hit the bottom

Chinese stocks are flirting with “bear market” territory at the worst moment possible for President Xi Jinping’s economy.

Having just grown a blockbuster 8.1% in 2021 and curbing the spread of Covid-19 like few other nations, one might expect investors to give China the benefit of the doubt. Not so, though, as the CSI 300 Index edges toward an official correction for the first time since 2018, when the US-China trade war first rocked markets.

Yet two pieces of good news are worth considering. First, today’s turbulence isn’t a repeat of 2015, when Shanghai shares plunged 30% in a matter of weeks. Second, Xi’s team has the scope and the tools to allay investors’ concerns about Asia’s biggest economy in relatively short order.