China's $10 Trillion Market Explosion

China's $10 Trillion Market Explosion by Dan Steinbock, EconoMonitor

Not so long ago, China’s A-share index lingered around 2,000. Before last week’s plunge, it closed at 5,200. In the short-term, the market will remain volatile, but just as China’s economy hasn’t emulated typical market fluctuations, its potential should prevail in the long term.

Recently, the value of Chinese stocks climbed over $10 trillion for the first time, according to Bloomberg’s data. That translates to a gain of $6.7 trillion in 12 months. That is more than Japan’s entire stock market and about 40% of the U.S. market.

Initially, the markets’ “wealth effect” seemed to support Beijing’s objectives. As the value of state-owned enterprises soared, it was easier for the...