July 14, 2015

"The Chinese government regards markets as clay that can be molded. Instead, markets are like water: They always find their own level, no matter who or what tries to control them."

LA Times But on the other hand there's reality, which seems to indicate that China's muscular intervention is working. by Scott Kennedy, Director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies in Washington

'The Shanghai Composite Index rose from its low Wednesday of 3,507 to close Monday at 3,970, up 13.2% in just three trading days. The Shenzhen and Hong Kong exchanges gained 12.5% and 10.2%, respectively. Although Chinese markets lost more than 30% of their value during the last month, they are still up 95% from June 2014, when the climb began. Meanwhile, China's downturn has barely caused a ripple on the New York Stock Exchange. The turmoil in Greece and the recent increase in the price of Starbucks coffee have had a greater effect on American investors.

'Recent history is of course not the only evidence that China's "clay" approach gets results: China has averaged 9% growth for 36 years by combining market-oriented policies with strong doses of protectionism.

'Despite what they preach, moreover, individual American officials from the president on down occasionally meddle with the market: They get in front of the camera to jawbone the economy, to reassure investors or try to talk the dollar up or down. And all of us remember where the temporary, if unofficial, CEO of General Motors lived after the global financial crisis broke out — 1600 Pennsylvania Ave.'

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