Chinese Stock Market And The World

From a Guardian article last July

China’s efforts this week to stem the tide of losses on its main stock market failed on Friday when the Shanghai Composite index plunged a further 5.8%, taking the drop in share values to 28% since their June peak. 

Panic selling wiped more than £2tn off the value of Chinese-listed companies and traders signalled the rout would extend into next week. 

The authorities had cut fees and eased borrowing rules that make it cheaper to buy shares in the hope it would cheer investors battered by the relentless selling since 12 June. 

A promise by the main stock market regulator to tackle concerns of market manipulation, which has sapped investor confidence in recent days, also failed to halt the slide.

In article last August the Washington Post commented

At the moment there’s panic in the market, because we have lots of retail investors,” said Wei Wei, an analyst at Huaxi Securities in Shanghai. “We’ve never experienced anything like this in China’s stock market, the speed of the decline and the scale of it."

The Chinese stock market is quite small. That is, there are not many investors compared to the size of the economy and the number of Chinese people.

So the ups and downs of the market might not reflect the direction of the whole economy, particularly if the investors have not learned to hold rather than sell at the first tremor.

Yes, there's that. But there are other factors. There is the sanctity of the dollar. There is the size of China's foreign dollar holdings. There is the question of relations with the West and the ongoing sanctions against Russia.

There is a lot that is not obvious and which may play a part in what is happening. I don't see how it all works, but I sense that what is going on may not simply be a slowdown in the Chinese economy.