The Shanghai composite index rebounded 5.8%, while the Shenzhen Composite, home to many of the country’s technology stocks, gained 3.8% in a sharp reversal of recent trading, while the Hong Kong Hang Seng index also regained 3.7%. But the mainland markets are still nearly 30% off their June peaks, after a rout that has wiped billions off the value of small investors’ holdings.

The move suggests that the authorities have–at least in the short term–found some measures that actually work. The People’s Bank of China, the country’s central bank that manages the world’s largest stash of foreign reserves, is now lending to the Chinese Securities Finance Corp, a body that provides financing to brokers to allow margin trading, to buy the small-cap stocks into which mom-and-pop investors have poured in the last few months, inflating one of the biggest asset bubbles since the financial crisis of 2008. The CSF injected $42 billion into the market through that channel Wednesday.

Also on Wednesday, regulators had banned company bosses and major investors (those with over a 5% stake in a company) from selling stock at all, and announced restrictions on the short-selling of shares (in which traders borrow stocks, then sell them, as a bet on falling prices).

The authorities have also been dropping subtle hints as to what might happen if market participants don’t help it to stabilize things. The Wall Street Journal quoted state news agency Xinhua as saying that police had visited the country’s stock market regulator to investigate “malicious short-selling.”

Stocks fell further at the opening Thursday on the perception that the measures were too heavy-handed and might threaten the very notion of freely-traded markets. However, they turned round within minutes.

Together, the actions have restored a degree of confidence and liquidity to the market, at least in the short term, allowing some of the many companies that had suspended their shares in the last few days to resume trading. However, the mainland markets remain deeply impaired: Bloomberg reported that over half of the market–some 1,439 companies–were suspended from trading as of Thursday (another 194 stopped trading today, despite the broader market turnaround).

But analysts remain fearful for the medium- and longer-term. given the obvious difficulties that Beijing has had in restoring order to the markets. Some noted ominously earlier this week that it’s the first time since 2008 that actions by a major central bank and government have failed to stabilize a situation.

There is widespread concern at the impact of disorderly markets on the real economy. Strategists at Bank of America Merrill Lynch said Thursday that it expects “slower growth, poorer corporate earnings, and a higher risk of a financial crisis,” the latter due to the opaqueness of a financial system that leaves huge room for doubt as to where risks are located and who is responsible for managing them.

BAML reckons that the end effect of the carnage will be a big net transfer of wealth to corporate owners and bosses, who cashed out while the going was good, from the man on the street. That will throw a wrench into Beijing’s plans to stimulate consumption at home and wean China off its traditional reliance on heavy industry and exports.

“A collapse in the stock market, in a climate of stagnant-to-negative growth in real estate, would almost certainly lead to a drop in household consumption and thus in consumption-driven industries,” according to analysts at think-tank Stratfor.