China is swamped by bad news. The coronavirus, now officially named Covid-19, overshadows everything. The bad news is moving from infection and death rates to the economic impact as the country tries to get back to work after the extended Lunar New Year break.
What commentators have missed in all the bad news was the welcome and encouraging inaction of the stock market regulator. After the market's holiday closure, observers were braced for significant market intervention and buying from the so-called national team of state-owned investors, but it never came.
The last trading day before the holiday coincided with the Wuhan citywide lockdown. Investors returned to dire expectations. Although the People's Bank of China announced a massive cash injection into the banking system, and the markets opened down 8%, the national team remained on the bench. As the last half an hour of trading arrived, the markets were weak and listless.
The lack of buying by the national team suggests a maturity or confidence in the market which investors have not seen before.
In the past, investors have rightly criticized regulatory authorities for needless interference in investment decisions and for being too keen to support the market in times of stress.
Foreign trust reached an all-time low after the 2015 market bubble collapse, with restrictions put on news reporting and trading and thousands of companies allowed to suspend their shares with little valid reason.
Rebuilding trust has been an essential part developing the markets since then.
Over the past few years, China has rolled out rules to improve investor access and to allow foreign companies to own domestic financial businesses, and throughout the recent period of tariffs and tough trade war rhetoric, it has continued to make progress in opening its financial markets.
Just over a year ago, China said that it would refrain from the micro-intervention of telling investors not to sell stock. It has kept its word so far and foreign investors are pleased.
Since the inception of Stock Connect in Hong Kong, which facilitates foreign investment into domestic Chinese A-shares, there has been over 1 trillion yuan ($143 billion) of net buying. That number was less than 100 billion yuan just after the 2015 collapse.
But given the news flow and a near-stopping of the Chinese economy, why would the regulator not have intervened when the markets opened again last week?
It turns out the regulator was right not to. Over the following week, stocks climbed and most indexes clawed back their losses or, in the case of the ChiNext, home to many private and pharma companies, actually rose well above pre-Wuhan lockdown levels.
There was no suspension of hundreds of stocks for days on end. Few investors or brokers received calls telling them not to sell. The market was a market, or at least as much as it can be within a Chinese context.
The dramatic fall following the holiday was not a bubble bursting like in 2015. The state did the right thing by holding back from intervening aggressively. A few days of trading cannot capture the entire impact of the coronavirus either domestically or globally. China will clearly require stimulus as it gets slowly back on its feet.
But at least the state had the good sense to realize that what was not needed was the buying of billions of dollars of listed stocks, especially as the state still holds the vast bulk of the $144 billion which it bought back in 2015.
Although over the weekend 39 of China's fund managers announced they would invest 2.4 billion yuan of capital in their own funds to bolster market confidence amid the viral outbreak, this effort is tiny in a market which has traded over 800 billion yuan a day since the return from the holiday. It is a sign of support for the government rather than meaningful support for the market.
The Chinese health authorities and political leadership can be criticized for their response to the virus and actions they took or did not, but the financial team passed its first big test.
The lack of interference bodes well for the future. China will get through the outbreak, business will return to normal at some point and the opening up of the country's markets will restart. If Chinese regulators are more comfortable with market-driven moves, then that will ultimately benefit the markets, investors and capital allocation.
But no one should be complacent. The state has not disappeared. There is plenty of evidence in the banking sector of state support, rolling over of debts and an unwillingness to really address bad loans. Indeed, the very system of state-owned enterprises is dependent on this happening.
At least in the stock market, the state's actions may become more refined than the brute buying and threats of 2015.
For decades, investors got lazy in their analysis that somehow the state would step in and support a given index level. Late afternoon became the default for when the buying would start. Those days may, just maybe, be behind us. If they are, then Chinese market financial reforms are a real step forward, not just playing around with ownership structures and licenses.
Investors will need to think again how they view the Chinese authorities: when markets fall next time, they could find themselves all on their own.
Fraser Howie is co-author of "Red Capitalism: The Fragile Financial Foundations of China's Extraordinary Rise."