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The 2015 Chinese Stock Market Crash: The State-Inflated Bubble and Its State-Driven Burst
How Chinese state media encouraged retail speculation, and the government's failed attempt to halt the crash
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MarketPedia Editorial
10 min read·July 8, 2024
Between June and July 2015, the Chinese stock market lost 30% of its value in three weeks. The government spent over $200 billion to stop the collapse. It did not work. A unique case study of state interventionism in the stock market.
The Boom Fueled by State Media
In 2014-2015, Chinese state media described the stock market as a patriotic opportunity. Millions of retail investors opened trading accounts, often using leverage. The Shanghai Composite rose by 150% in 12 months.
Chinese Interventionism
The government reacted by allocating 200 billion to buy stocks, banning short selling, and suspending half of the market. It did not work: the market lost another 30% by August.
Lessons
- State interventionism in markets has limits.
- State media encouraging speculation is a red flag.
- Retail leverage in a bubble market is explosive.
# China# 2015# Stock Market# Shanghai# Bubble# Interventionism