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I’d call the policy being followed by the People’s Bank in the China Evergrande crisis “Try to support the markets but see how little we can get away with.”

Today China’s central bank supplied liquidity (About $18 billion worth) to the country’s financial markets with an injection of short-term cash. But the move fell far short of the kind of “Charge of the People’s vanguard” that the bank has mustered in earlier crises. And, importantly, there was no big statement of market support to go with today’s actions.

China and its central bank clearly have the cash and the power to intervene mightily in order to prevent the de facto default at the property developer from infecting the rest of the property sector and from throwing the country’s banks–owned $88 billion by Evergrande–into chaos.

But the government and financial regulators in particular have a strong incentive to make Evergrande feel as much pain as is compatible with stability in the rest of the financial markets because the company is a prime example of the excesses in the financial system–excessive speculation and massive financial leverage–that the Chinese government has been trying to stomp on. Coming to Evergrande’s rescue too quickly would undermine the government’s long-term financial market agenda.

Even the restrained action by the People’s Bank, however, provided solid relief to investors in global markets who had sold off China stocks that trade in New York and the shares of commodities, auto makers, and industrial equipment companies that depend on demand from China.
As of 1:45 p.m. in New York–so these prices are before the press release from the Federal Reserve’s Open Market Committee meeting today–shares of Alibaba (BABA) were up 0.92%, shares of Tencent Holdings (TCEHY) were ahead 1.60%, and shares of the iShares China Large-Cap ETF (FXI) were higher by 2.06%. Among commodity stocks copper miner First Quantum Minerals (FQVLF) had gained 6.57%. Shares of Volkswagen (VWAPY), which has a huge presence in China’s car market, had tasked on 2.34%.

And now we wait for the Fed to speak.