The Systematic Politicization of China's Stock Markets
Forthcoming in Journal of Contemporary China
22 Pages Posted: 29 Sep 2015
Date Written: September 27, 2015
Abstract
The paradox that the performance of China’s stock market has not matched the performance of China’s real economy has been puzzling. This article argues that one of the major causes of the poor performance of China’s stock markets is that ever since their establishment, China’s stock markets have been systematically politicized by the ruling party to promote its political agenda. The mantra of “socialism” of the ruling party has turned the stock markets into a mere fund-raising vehicle largely for failing state-owned enterprises, with investors’ interests being only a secondary consideration. The regulation of stock markets is subject to the principle of maintaining one-party ruling. Such a systematic politicization of stock markets has caused some serious consequences for China’s stock markets and economic growth.
Keywords: China's stock markets, stock market regulation, Chinese economy
JEL Classification: G18, G30, G34
Suggested Citation: Suggested Citation