Finance & economics | In the stocks

China is distorting its stockmarket by trying to prop it up

State purchases of shares are bad enough, but other measures are far more destructive

A shareholder looks at a stock board at a securities business hall in Hangzhou, Zhejiang Province, China
Have I gone colour-blind?Photograph: Getty Images

Investors in China’s stockmarket have been doing handsomely this year. The Shanghai composite index has risen by 12% from a multi-year low in February, notwithstanding a recent drop. Equity analysts and state media alike are cheering. For Xi Jinping, China’s leader, the rally was a relief, since retail investors own at least 80% of the market. A previous rout hurt them badly, adding to anxieties about the country’s future. To many, the recovery reflected good governance and fortune.

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This article appeared in the Finance & economics section of the print edition under the headline “In the stocks”

From the June 15th 2024 edition

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