The Shanghai stock market has lost a quarter of its value in five days and the Chinese government has tried throwing everything it can at the problem. Paul Mason of Independent Television News reports.
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As we said, Wall Street finally broke its losing streak today, ending with a better than 600-point gain.
But back in China, another volatile day led to big swings between stock gains and losses, as worries mounted over the state of the world’s second largest economy.
That’s our focus tonight.
And we begin with this report from Paul Mason of Independent Television News.
The Shanghai stock market ended down last night, and has now lost a quarter of its value in five days, and nearly half since June. That is the money of the Chinese middle class, poured into shares after the property bubble burst and because the government encouraged it.
Now the Chinese government is throwing everything at the problem. It’s spent $485 billion buying shares to keep the prices up. It devalued its currency, and yesterday’s quarter-percent interest rate cut was the fifth this year. But nothing is working.
JAMES MEADWAY, New Economics Foundation:
It’s just extremely difficult for any government, the Chinese government to, in this case, try and torque up a market, when there’s people desperately trying to leave from the thing. And that’s with them chucking $485 billion at least into directly buying shares and trying to persuade people that they will stand behind the market at this point in time.
You can see China’s growth strategy from the skyline, billions of dollars’ worth in cheap loans used to fund tall buildings, public money for massive infrastructure spending.
The plan was that the middle class, flush from property and stock market gains, would now take over driving growth. But it’s not happening. Now Chinese people face the double nightmare of a slowing real economy and a financial meltdown.