China in Response to the Financial Crisis

According to Telegraph on Friday,

A promise by the Chinese government to shore up its faltering stock exchange sent share prices soaring in Shanghai.

The benchmark Shanghai Composite Index was up 9.5pc by midday, at 2075.09, with many shares hitting the 10pc daily limit on price increases.

The surge came after an overnight announcement from the government that it would abolish a 0.1pc stamp duty on share trading.

The ministry of Finance also promised that Huijin Investment, part of China’s enormous China Investment Corp sovereign wealth fund, would start buying up the market.

Also from China Daily,

Premier Wen Jiabao said on Saturday China was confident and fully capable of keeping a good momentum of economic growth this year despite domestic difficulties and a global economic slowdown.

But the Telegraph presents another picture of China’s financial performance in the article “Financial Crisis: How the countries are doing”,

Beijing is censoring financial websites over fears that China’s plunging stock market will lead to protests from investors who have seen their life savings evaporate as share prices drop.

The Communist Party’s publicity department is understood to have ordered websites to remove all negative comments and reports about the state of the markets. Anger is rising among ordinary Chinese savers and investors over the failure of the government to protect them from the effects of the global financial meltdown. The Shanghai Composite Index, China’s equivalent of the FTSE 100, has plunged by almost 70 per cent over the past year, as a result of the slumping American economy and rising inflation at home. Over the same period many Chinese have seen the value of their pensions and savings plummet.

September 21, 2008 8:48 PM
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Categories: Economy