As we observed in yesterday morning's market wrap, while US traders took the day off for the MLK holiday, China was busy defending an accelerating selloff across its stock markets.

During Monday trading, having traded quietly lower for the past few days, Chinese stocks tumbled in early trading on the mainland and in Hong Kong’s offshore market amid weakness in Asian equities. The Shanghai Composite Index dropped as much as 2.2% to head for its fifth loss in as many days, its longest losing streak since Aug. 2015.However a sudden bout of late afternoon buying sent the loss down to just -0.3%, on speculation China's national team was once again back in the markets.

The exact same pattern emerged overnight as well:

Very much like the previous day, China's CSI 300 Index climbed 0.2% on Tuesday, after earlier losing as much as 0.8%. On Monday, the index recovered from an intraday drop of 1.7% to close little changed, with some traders speculating the afternoon rally was caused by state buying.

We now have confirmation that, indeed, after a long hiatus, it was precisely the "national team" that had made an appearance, and was propping up stocks with an explicit directive: don't let stocks drop during Xi Jinping's trip to Davos. It is almost as if it is a rite of passage for Davos participants to demonstrate how effective they are at manipulating their stock market.

As Bloomberg reports today, China has taken "steps" to support its stock market this week - by which it means ordered various central bank conduits to buy stocks during selloffs - "according to people familiar with the matter, as President Xi Jinping’s appearance at the World Economic Forum in Davos puts Asia’s largest economy in the global spotlight."

Apparently China did not question what it would look like once it emerged that it is manipulating its market to give the false impression of stability at a time when Xi was addressing Davos, and expounding on the glorious benefits of globalization and liberalization... if not so much for asset price discovery or the yuan, of course.

State-owned investors bought shares to steady the market on Monday, while some funds were guided on Tuesday not to sell holdings with big weightings in benchmark indexes, the people said, asking not to be identified because they aren’t authorized to discuss the matter publicly. China’s securities regulators asked funds and brokerages to trade prudently this week and directed exchanges to report any abnormal transactions, the people said.

To be sure, Chinese authorities have traditionally intervened in markets before and during events of political significance, with government funds stepping in to boost stocks before a key meeting of the National People’s Congress last year and before a 2015 military parade celebrating the 70th anniversary of the World War II victory over Japan.

"China is doing this probably because it wants to paint an image of positivity as President Xi attends Davos," said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. Stocks will continue to be volatile as the nation’s monetary conditions tighten, Xie said.

Earlier today, taking the role of the world's globalist savior and free trade savior, and the "free world's" foil to the protectionist Trump, Xi - in the first visit by a Chinese leader to the World Economic Forum - told a Davos audience that “protectionism is like locking yourself in a dark room, which would seem to escape wind and rain, but also block out the sunshine. No one is a winner in a trade war.”

His audience was delighted to lap it up, despite the glaring contradictions of China's firewall, pervasive government subsidies of exporters, and constant WTO regime violations. Oh, and zero freedom of speech or human rights, of course.

Which may explain why China is engaging in outright market manipulation merely to show how "strong" its market (and thus economy) is. After all, such interventions are nothing more than a sleight of hand and an indication of how little the Communist Party thinks of the intelligence of its counterparties: surely one has to be very obtuse to be fooled by such a glaring intervention that "all is well." Yet the message sent by Xi to the world's "smartest and most powerful" people is that according to the Chinese president, they are on the same intellectual level as a few dozen million daytrading housewives.

We are confident all of this will be lost on the "Davos elite."