Did China's Stock Market Crash Just End Economic Reform?

forbes ^ | 7/05/2015 @ 9:59AM

[BenLurkin]

The beauty of markets is that they have a mind of their own. For the Chinese government, this has been a tough pill to swallow.

Try as it might, the Chinese government was unable to arrest the decline in the domestic stock market last week. The central bank cut benchmark interest rates and the amount of money banks must keep with it on reserve. A government investment vehicle made it known that it was buying ETFs. The securities regulator eased regulations on margin trading and the Stock Exchange cut transaction fees. Despite this, the benchmark Shanghai Composite Index declined 12% over the course of the week, bringing the total decline since June 12th to more than 28%.

...

One might be tempted to rejoice that the Market triumphed over the Communist Party. Along a similar vein, Bloomberg News last week wrote: “Stock investors of the world unite! For the first time in modern China, you outnumber the Communists.”

There will, of course, be many China bears highlighting the risk of social instability from the recent market collapse. It is certainly reasonable to question whether the Chinese people are losing faith in the Chinese government’s willingness and ability to watch over its people after the recent crash.

[Wingy]

China is up more then 5% this evening.

[BenLurkin]

Apparently it has long been a very volatile market.

[GeronL]

Much of their economy is based on fraud anyway

[BenLurkin]

If I was ever tempted to invest in Asian markets — I’d go the Vegas and play slots.

[GeronL]

Nah, invest in Samsung, Sony, Nissan and Toyota

in

1982

:p

[JohnBrowdie]

Money running from Europe

[STJPII]

Himax

[apoliticalone]

If not for the financiers and bankers that make deals and produce nothing, while getting bailed out, and the Commies in China would still be content with 1 speed rickshaws and bicycles instead of nipping at the heels of the USA economy and our security. The USA would still be self sufficuent making stuff with a more secure dollar and trillions in less debt.

The only concern of the globalists is keeping score on their bank account. Patriotism and defense of country is a concept they hype and encourage fir others, not themselves.

[Zhang Fei]

Much of their economy is based on fraud anyway

Disagree. While there's a bit of arrogance in the Party's public statements, I believe there's also the unstated but underlying recognition that the swift transition towards capitalism since 1979 is what has driven China's rapid growth for almost four decades, not the Party's unique genius or originality. That is why, with the exception of measures meant to protect the prerogatives of the Party aristocracy, Chinese economic policies tend to hew closely to Western norms.

[aMorePerfectUnion]

“Much of their economy is based on fraud anyway”

In the past, I said I didn’t trust a single number out of china.

Now I can say the same thing about the US.

[central_va]

What a joke, The ChiComs build empty cities; how is that a Western norm? there is nothing normal about China. it is an enigma and we should divest as soon as possible.

[knarf]

What does this all mean to ME ... just a married guy on SS ?

[Deagle]

Wow! Just who are you supporting?

The Chinese are well known for fraud, copying others electronic devices, poor or no control quality or safety of exports. Where are you getting your information?

The worst of it is that our politicians continue to allow unsafe inspections on food products and of course no control of fake electronics devices allowed into the country. Sometimes, I think that it is encouraged for business purposes. Why worry about the folks until problems arise.

[CodeToad]

“The ChiComs build empty cities; how is that a Western norm?”

We built homes and force banks to give loans to people that cannot afford them; they’d be empty otherwise. Not exactly the same thing but just as damaging.

[central_va]

We built homes and force banks to give loans to people that cannot afford them; they’d be empty otherwise. Not exactly the same thing but just as damaging.

Those homes would go down in price and they would get bought at some price eventually. Those empty ChiCom cities are monuments to a perverted form of market capitalism.

[Zhang Fei]

What a joke, The ChiComs build empty cities; how is that a Western norm? there is nothing normal about China. it is an enigma and we should divest as soon as possible.

Projects are begun only after buyers are lined up and substantial deposits are placed in escrow. But you're barking up the wrong tree - these developments are put up by privately-owned real estate conglomerates, as well as local entrepreneurs. They're one of the few investment outlets for Chinese savers prevented from investing abroad, not Potemkin projects paid for with government funding. The capital controls that have led to this situation are fairly orthodox - Japan only began dismantling its version long after it surpassed China's present level of development.

[captain_dave]

When a government announces it will support the market then you can bet the bank that the market is in dire straights and you should sell. The PRC government would have been better off not announcing intervention while intervening.

[blueunicorn6]

“Money makes the world go round
The world go round
The world go round.”

[Caipirabob]

Thanks for the insight, it’s one of the reasons I read this forum. I was just telling my wife to read all these posts on China and Japan to get the Unser word on what’s happening.