China risks losing the battle of market perceptions

President Xi Jinping is prodding China’s largest banks to slash rates on mortgages and deposits. Yet here’s what’s most interesting about Beijing harnessing roughly US$5.3 trillion of mortgages, equivalent to the combined gross domestic product (GDP) of the UK and Italy: how little excitement the news generated in global markets. One reason for the dearth of enthusiasm is that investors reckon China has way more yet to do to stabilize economic growth and contain its spiraling property crisis. The bigger question, though, is the extent to which Xi’s team is internalizing this message.