In recent months, China's economy has been navigating through turbulent waters, and the metaphorical bull, representing growth, still appears thirsty for revitalizationDespite a bold target of 5.5% economic growth set for 2022, the reality reveals that the A-shares market has not yet found the required optimismThe data from January and February seemed to present an illusion of recovery, but this was soon overshadowed by escalating COVID-19 cases and a faltering property market.

The government's economic work report laid out the ambitious growth target, yet the response from the market was tepid at bestThe A-share markets faced significant setbacks, with investor sentiment plunging to an all-time lowFor an economy striving for 5.5%, time is of the essence, and the space for effective policy intervention is rapidly diminishing.

After the Central Economic Work Conference redirected its focus toward stabilizing growth, a phase of market peak was ironically observed

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On December 13, 2021, buoyed by the conference's sentiments, the CSI 300 Index peaked at 5143.8 points but quickly fell, leaving in its wake an unexpectedly protracted bear marketWho could have predicted that after that day, the A-shares would tumble relentlessly?

Just before the Lunar New Year, an adjustment dominated by 'track stocks' had sparked a flicker of hope regarding a path back to stable growthYet, immediately following the festive season, the market shed that fleeting optimism, transitioning into a complete shift in sentimentDismal property data has led to persistent doubt regarding the feasibility of growth stabilization, casting a shadow over what was until then a cautiously optimistic outlook.

Since March 3, a rapid downturn has gripped the market, leading to a staggering 13% drop in just nine trading days

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In comparison to the highs of December 2021, this represents a 22.6% decreaseThe implications are grave, marking a transition into bear territoryThe Hong Kong Stock Exchange has mirrored these struggles, with the Hang Seng Index nearing a critical point of 18,000, signifying a 41.5% depreciation from its peak in February 2021.

Skepticism about the effectiveness of policies aimed at stimulating growth remains palpable among analysts and investors alikeEven with the National Bureau of Statistics unveiling positive economic data for January and February, it failed to alter the market's negative trajectoryThe contradiction between the seemingly favorable indicators and other crucial data, such as sluggish credit and social financing figures, has only deepened the confusionThe pressing question remains: what do we truly believe about the current state of the economy? Did the bull indeed drink water?

Compounding the difficulties, COVID-19 began to resurge in March, and global conditions turned precarious, with uncertainties surrounding international conflicts

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Oil prices skyrocketed to levels not seen in over a decade, with Western markets exhibiting extreme volatility, resulting in a substantial decrease in global risk appetite.

On a microeconomic level, American authorities identified five Chinese companies publicly traded in the United States as being at risk of delisting, creating significant panic among investors and leading to abrupt declines in Chinese stocksThis turmoil was felt on both the Hong Kong and A-share markets, prompting a notable depreciation of the Renminbi.

To navigate these challenges, it is crucial to keep an eye on external conditions while preemptively addressing COVID-19's resurgencePolicies that aim to stabilize growth must not only focus on increasing liquidity but also prioritize ensuring that the 'bull drinks water'—an analogy for effective capital flow in the market

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As the first quarter of 2022 rapidly draws to a close, time is running dangerously short for policymakers.

So, has the bull encountered a drinking spot after all?

The central bank's recent adjustments, including cutting reserve requirements and interest rates, are akin to guiding the bull to the riverbankWhether the bull actually takes a drink hinges on whether there is a tangible uplift in credit and social financing dataThese figures serve as leading indicators and provide critical insight into the efficacy of stabilizing measures.

In January, the social financing data briefly ignited hope within the marketAlthough its structure raised concerns, the overall credit figures exceeded expectations, driven largely by government financing, suggesting that infrastructure spending had started to play an essential role.

Unfortunately, this optimism was fleeting as February saw social financing figures plummet, extinguishing any remaining hopes for immediate recovery

The results indicated that the central bank's policies appeared to be temporarily ineffective, signifying that the bull had still not quenched its thirstJanuary's social financing totaled 1.19 trillion yuan, a staggering 531.5 billion yuan short of market projections.

Two significant components drive residential long-term loans: one being long-term consumer loans (primarily mortgages), which constitute approximately 75% of this category; the second reflects individual business loans, accounting for about 23%. Current trends suggest that interest rates are not the primary barrier to purchasing homes; rather, it is a significant lack of consumer sentiment towards home buying.

Are the data fluctuations a result of the Lunar New Year festivities? A combined analysis of January and February shows that together they provided 7.3626 trillion yuan in new social financing, indicating a year-on-year increase of 449.9 billion yuan – but still one of the smallest increases in recent years

The structural intimacy of the loans reveals a concerning picture; specific demand for corporate long-term loans and residential long-term loans fell by about 1.4 trillion yuan on a year-on-year basis, painting a bleak picture of internal demand for credit.

Far from an accurate representation, the economic statistics presented a degree of 'statistical illusion.' On March 15, when stellar economic data was announced, the market reacted irrationally, plummeting by 5%. Were these economic data really credible? What exactly is the market anxious about?

Year-on-year growth in industrial output for January to February reached an impressive 7.5%, a significant leap compared to the expected 3.2%. However, digging deeper into the figures shows potential weaknessesInvestments and consumption also exceeded expectations greatly, with fixed asset investment and retail sales growth reflecting robust performance, yet the mixed signals raised further uncertainty.

Why is there such a stark deviation between analysts' expectations and actual results? It appears that misunderstanding the relationships between month-on-month and year-on-year growth may be pivotal in interpreting the data

For instance, while industrial activity seems lackluster on a month-to-month basis, the juxtaposition with year-on-year figures creates a false narrative of strengthThe inadequacies appear pronounced when considering long-term trends.

Consumption appears to have modestly improved; however, the extent of this growth might not be as pronounced as the data suggestsFixed asset investment, on the other hand, shows exceptional variance, indicating that while some sectors thrive, manufacturing remains underwhelmingThe apparent dichotomy between data and observed on-the-ground realities only adds to the prevailing skepticism.

The dwindling timeframe for policymakers to instigate effective measures cannot be overstatedThe property sector often embodies a double-edged swordIt has historically spurred rapid growth, but as property prices surge, social burdens increase.

Consequently, authorities are now keen on achieving credit expansion devoid of relying heavily on property markets

This inherently requires ramping up fiscal expendituresIn theory, investments in infrastructure, for instance, could yield similar effects as liquidity from the property sector has historically done.

However, following massive infrastructure initiatives such as the 'Four Trillion' stimulus, the overall growth rate of such investments appears to be plateauing, leading to intensifying scrutiny regarding their efficacy.

Therefore, as authorities scramble to meet growth benchmarks, skepticism prevails about whether recent policies can offset the downturn in real estateThe pressures are mounting, prompting urgent discussions on actionable measures during meetings like the one held on March 16 focused on stabilizing capital markets and broader economic conditions.

Such deliberations emphasize the need for immediate tangible actions rather than rhetorical reassurances