Top Government Meetings in China

In a “government centric” equilibrium like China, the central government performs frequent and intensive interventions while investors prioritize information about government policies over macro-economic fundamentals. Consistently, top government meetings on economic policies are highly anticipated by the Chinese equity market. Just as the heightened uncertainty prior to FOMC meetings gives rise to the significant pre-FOMC drift in U.S. equity, we find significant pre-announcement returns prior to top government meetings in China. By contrast, we do not find significant pre-announcement returns before macro announcements in China, confirming the presence of a “government centric” economy with policy-driven ma