When China’s stock market plunged more than 30 per cent over the summer last year, the country’s regulators leapt into action. Unfortunately, the leaping in question was less a graceful, synchronised jump and more a Three Stooges physical slapstick comedy routine as the government scrambled to retain control of its equity markets. Regulator actions were uncoordinated, at times even contradictory.
The disharmony was the result of two factors: the lack of any will for significant interdepartmental communication and a desire to avoid any responsibility for a failurefailing to save the markets.
Chinese regulators have distinct agendas that can be at odds with one another. By increasing insurance and bank exposure to the then-collapsing markets, the bank and insurance regulators were at risk of dragging their own sectors into a mess they could not control.