Profits at industrial groups slid 2.2 percent in the first half, sharply down from a 29 percent gain in the same period last year, according to the national statistics bureau.
The government has started to loosen policy, cutting interest rates twice and encouraging banks to lend more to infrastructure projects. However, compared with late 2008 when it unveiled a mammoth stimulus package, Beijing has been much more tentative this time around and liquidity remains relatively constrained.
Given the bleak corporate backdrop and the muted policy support, a stock market rally this year would have been surprising and divorced from the fundamentals of the economy. For Mr. Guo’s part, analysts say it is reassuring that he has not been sidetracked by concerns over market weakness.
One episode highlighted this point last month. Retail investors, who account for about three-quarters of the daily turnover in the Chinese market, launched an online petition that attracted nearly 10,000 signatures in two weeks. Their aim was to get the regulator to halt initial public offerings, believing that a cap on the supply of new equities would give a lift to the market.
“Behind every retail investor, there stands a family that has been deeply hurt by the endless IPOs and the poor performance of stocks,” the petition read.
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