Reviving China’s Stock Market Aids Economic Recovery, Says China Securities Journal

SHANGHAI – Revitalizing China’s stock market and restoring investor confidence are crucial for the country’s economic recovery, as they can break a harmful cycle that has stifled both investment and consumption, according to an editorial in the official China Securities Journal released on Monday.

Last week, Chinese stocks experienced their strongest performance since 2008, following the government’s announcement of numerous stimulus measures, including interest rate reductions and a significant funding package to support the equity market.

The editorial highlighted that the capital market serves as both a "barometer" of the macro economy and a "thermometer" of investor sentiment. It emphasized that revitalizing the market is a critical step toward enhancing confidence and improving economic outlook.

For years, Chinese stocks have lagged behind global markets, affected by an economy struggling under the weight of a property crisis, subdued consumer spending, and geopolitical tensions. The China Securities Journal pointed out that investor concerns over internal and external risks have contributed to a stagnant stock market, which has, in turn, diminished investor confidence, creating a negative feedback loop.

Moreover, low risk appetite has made it challenging for private equity investors to exit, further impacting the economy. The article argued that rejuvenating the capital market is essential to breaking this cycle.

The newspaper also noted that forthcoming policy announcements are expected to bolster confidence further, aiding in the recovery of household finances and stimulating the economy.