China’s got a fixable lost-in-translation problem

As Xi Jinping’s regulators tighten their grip on quantitative trading, they are inadvertently giving global investors another reason to make ill-timed comparisons to 2007.

In August of that year, as US subprime debt troubles were starting to bubble up, a bunch of model-driven hedge funds suffered their own “quant quake,” a phrase now being applied to China.

Drawing such comparisons clearly isn’t Beijing’s intention. But they come at a moment when many global investors wonder if China is having its own “Lehman moment” amid cratering property and stock values.

Odds are, China isn’t, as scores of Asia Times articles have argued in recent months. The market forces in 2007 and 2008 that toppled Lehman Brothers were of a different nature than those plaguing China Evergrande Group or Shanghai trading pits.

Yet the quant crackdown fits with a disturbing pattern that helps explain why foreign investors are so skittish on Chinese markets. It’s a reminder of how mixed messaging can cause confusion at a moment when Xi is struggling to revive foreign interest in the stock market — while doing things that scare investors off.

Forty months on, Wall Street is still trying to figure out what’s going on with Jack Ma and the much-anticipated Ant Group initial public offering. Despite countless tries, Team Xi never managed to explain that episode — or myriad crackdowns on tech platforms since.

By late 2023, stung by debates about whether China is “uninvestable,” it seemed Team Xi was turning the page. In the last 10 days of last year, though, regulators unveiled plans for a crackdown on the gaming industry.

Though Beijing tried to walk back the news, it was too late as investors feared broader curbs on tech platforms. Tencent alone saw tens