China's "national team" has probably spent about $144bn to bolster the country's fragile stock market, Goldman Sachs has estimated, raising questions about how much firepower remains if stocks resume their recent sharp descent.
The government has not disclosed either the amount of rescue funds it has allocated to the coalition of state financial institutions - known as the "national team" - or how much of this total has already been invested.
But Goldman estimates that China Securities Finance Corp (CSFC), the state-owned margin lending agency that is the main conduit for injecting rescue funds into the market, has about Rmb2.0tn ($322bn) at its disposal.
This total includes Rmb1.3tn in loans from large commercial banks, Rmb80bn in bonds issued in early July, and equity capital of Rmb100bn. The People's Bank of China (PoBC) has also said it has provided liquidity to CSFC through re-lending and other channels.
Tallying up how much of this Rmb2.0tn total has already been spent is more challenging.
Media leaks about the size of the national team's war chest are likely to have come from officials eager to communicate the government's muscular response to the market turmoil. By contrast, the national team has good reasons for keeping quiet about how much it has already spent, since this could prompt investor worries that the government's resources are nearly exhausted.
Indeed, shares tumbled by 10 per cent last week after local media cited anonymous sources saying that the national team was preparing its exit plan.
"The episode has underlined the difficulty the government faces in the task it has set itself of convincing investors that equity markets will deliver sustained gains," said Chang Liu at Capital Economics.
"The market is driven more than ever by speculation about official intentions and any positive momentum will raise questions about whether support will be withdrawn."
Goldman estimates the current amount spent at Rmb860bn-Rmb900bn. Media reports in early July indicated that CSFC lent Rmb260bn to brokerages to support stock purchases, bought Rmb400bn in stock directly, and invested another Rmb200bn in mutual funds.
Using an alternative methodology that compares fund inflows to the stock market from traceable sources with the total inflows necessary to keep the index at current levels, Goldman reached an estimate of Rmb900bn for national team investment in June and July.
"We believe the current market concern over the Chinese government's potential exit from its market support is probably overdone," Chengjie Liu and his colleagues wrote this week.
"With the government having just spent a considerable sum to stabilise the market, it is too early for them to reverse course, especially given the still-skittish manner in which the market is trading."
The problem for the government is that it apparently has little to show for the money spent.
The Shanghai Composite Index was at 3,682 late last week, just 9.2 per cent above the low point touched at the height of the selldown on July 9 and 28.9 per cent below the seven-year high of 5,178 reached on June 12.
On the other hand, the government is probably not comparing the market's current level to its recent highs and lows, but rather to the unknown depths the index might have plumbed had the national team done nothing.