The Systematic Politicization of China's Stock Markets

Forthcoming in Journal of Contemporary China

22 Pages Posted: 29 Sep 2015

See all articles by Guoping Li

Guoping Li

Central University of Finance and Economics, Beijing China

Hong Zhou

Central University of Finance and Economics (CUFE) - School of Accountancy

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

Li, Guoping and Zhou, Hong, The Systematic Politicization of China's Stock Markets (September 27, 2015). Forthcoming in Journal of Contemporary China, Available at SSRN: https://ssrn.com/abstract=2666127

Guoping Li

Central University of Finance and Economics, Beijing China ( email )

39 South College Road
Beijing, Beijing 100081
China

Hong Zhou (Contact Author)

Central University of Finance and Economics (CUFE) - School of Accountancy ( email )

Beijing
China

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