China bulls are usually wrong because China is often wrong

China bulls are usually wrong because China is often wrong

Perhaps the only thing more dramatic than the gyrations of Hong Kong and Chinese stock markets in recent weeks has been the mental gymnastics of China bulls and optimists as they tried to explain the actions of a government prone to giving mixed signals, sudden reversals and policy U-turns.
 
When one tries to attribute intentionality and rationality to such dramatic policy reverses, Donald Low argues, it is hardly surprising that the "explanations" of Chinese authorities are a mixed bag of implausible claims, ex post rationalizations, non sequiturs and wishful thinking.
 
The reality is that the Chinese state is not all that exceptional. Like the governments of most countries, it is often myopic and torn between short- and long-term goals; ideology and loyalty regularly come into conflict with rational, meritocratic decision-making; and there is usually a large gap between its policy goals and its capacity to achieve those goals.
 
In short, the reason China bulls often get it wrong is that the authorities are themselves often wrong.