China is intervening and otherwise pulling out all the stops to brake the pace of yuan depreciation and halt a worsening equities selloff.

Traders were “baffled” Tuesday by an abrupt turnaround for both Mainland and Hong Kong shares. The latter were on pace for an eighth consecutive day of losses before “something” turned the tide. The same general dynamic was observable on the A-share benchmark.

Although the financial media was keen to point out that both city and Mainland shares were oversold, the farcical figure below, which illustrates the bounce on the Hang Seng, smacks of something other than a technical bounce or investor dip-buying.

That looks like divine intervention of some kind. The Hang Seng fell into a bear market last week, and the seven-day losing streak seen through Monday was the longest in 21 months.

The optics around the equity selloff were poor and Chinese investors aren’t exactly famous for their stoic fortitude in the face of adversity. Last week, Xi instructed some large Mainland investment funds to avoid being net sellers of A-shares and Star Board firms were encouraged to buy back their own stock. Foreign investors were net sellers of onshore equities again on Tuesday. That ran the streak to a dozen sessions.

It seems obvious (to me anyway) that the vaunted “national team” was in the market. Remember: “Plunge protection” isn’t a meme in China. Beijing has an actual plunge protection team established during 2015’s summer stock meltdown. The collection of relevant entities bought an estimated CNY1.8 trillion in shares over six months that year to help arrest whatever portion of the selling pressure couldn’t be stanched by arresting the sellers.

Meanwhile, the PBoC is busy engineering a funding squeeze in an effort to raise the cost of betting against the beleaguered yuan.

The figure above is a proxy for yuan borrowing costs. They rose the most in half a dozen years on Monday.

On Tuesday, CNH Hibor rose to the highest since 2018 and PBoC bill sales in Hong Kong exceeded this month’s maturities by CNY10 billion.

All of that points to an increasingly aggressive approach to curbing depreciation pressure, as does the most aggressive fixing on record relative to consensus.

As the visual shows, we’re in uncharted territory now. The central bank leaned harder and harder into the fix in recent weeks as economic concerns and policy divergence with the US pressured the currency. Tuesday’s fix was the crescendo.

I should reiterate that all of these measures, “desperate” as they might seem, are by no means indicative of outright panic, even as I’ve used the word “panic” in the context of Chinese policymakers several times in recent days. There’s plenty of scope for Beijing to wield an even heavier hand should the situation deteriorate further.

Officials are still countenancing yuan depreciation, in part for economic reasons but also because a draconian crackdown would underscore the extent to which renminbi internationalization remains entirely far-fetched.

You could argue that the absence of draconian measures in favor of belabored efforts to manage the rapidity of the slide suggests Beijing is in fact committed to a more liberalized currency regime, but… well, suffice to say it all depends on how bad things get. The same goes for equities. If push comes to absolute shove, Beijing will absolutely push and shove.