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Stock prices in China are sliding — in some cases more than 30% from a year ago


U.S. stocks have been soaring in recent weeks, but in China the market has been headed in the opposite direction. Indexes of Chinese shares have had a rough start to the year, and they're down 20%, 30% or even more from 12 months ago. The government in Beijing is starting to pay attention. But as NPR's John Ruwitch reports from Shanghai, turning things around won't be easy.


JOHN RUWITCH, BYLINE: In a stock trading hall at a brokerage called Red Tower Securities, retirees gather in the afternoon to swap rumors and make a few trades. It's cold, wet and gray outside, and the mood inside isn't much better. Investor Zhang Huijuan (ph) says it's been brutal.

ZHANG HUIJUAN: (Through interpreter) Lots of people have lost money.

RUWITCH: She starts pointing at a gaggle of her friends.

HUIJUAN: (Through interpreter) She lost money, she lost money, she lost money.

RUWITCH: China's benchmark CSI 300 index is down more than 5% since the start of the year, and it's off about 45% since its peak in early 2021. By some estimates, $6 trillion have been wiped out in the slide. Zhang's friend feels the pain.

UNIDENTIFIED INVESTOR: (Through interpreter) How can you have a good Lunar New Year without money? Our kids have been laid off, they're unemployed, and here we are stuck in this market.

RUWITCH: The Lunar New Year, China's biggest holiday, is just around the corner. But analysts say this problem is going to take a lot longer to fix. Robin Xing is chief China economist at Morgan Stanley.

ROBIN XING: As economists, we tend to believe stock market is a proxy of economy.

RUWITCH: Xing says the Chinese economy faces a number of problems, but the most concerning for markets is deflation. The consumer price index is up, but he points to a thing called the GDP deflator. It's a measure of inflation that includes investment along with prices.

XING: It has been in negative territory for three quarters in a row. That's the longest and the deepest deflation since the 1998 Asian financial crisis.

RUWITCH: The worst deflation in a generation. Xing says it's driven by weak demand. That's been underpinned by sluggish economic growth in the wake of the pandemic and government policies to reduce debt, especially in real estate. Businesses have been cutting back on spending and hiring. The authorities in China have been taking piecemeal steps to revive the economy, and lately they've stepped up efforts to stop the bleeding in the stock market. Winnie Wu is China strategist at Bank of America in Hong Kong.

WINNIE WU: I think for the past week or so, these policies coming out, it sends a message that government cares about the market.

RUWITCH: China's cabinet pledged more forceful measures to boost confidence in the market. Regulators limited short selling, and Bloomberg News reported that the authorities are preparing a stabilization fund worth around $280 billion to prop up shares. So far, the effects have been limited, but Wu says she thinks government intervention will ultimately work, at least like it did in 2015 during the market's last big nosedive.

WU: This time, it's probably the same thing in the sense that these policies are good enough to stop the downslide, but it's not good enough - or it's not even intended - to drive a rally or drive a big bull market.

RUWITCH: For that, she says, China has to address its macroeconomic challenges, deflation, a property crisis, low confidence and consumption, and unanswered questions about what sectors are going to propel the Chinese economy into the future. Thirty-five-year-old Alex Wang (ph) thought he had that figured out. In 2020, he put some of his savings into mutual funds focused on new energy, pharmaceuticals and liquor. He says he doubled his money by the next year but has lost it all since and then some.

ALEX WANG: No (laughter). (Through interpreter) I won't invest anymore. This kind of lesson you only need to learn once.

RUWITCH: For the moment, though, he's holding onto his shares, waiting for the market to bounce just a little so he can sell.

John Ruwitch, NPR News, Shanghai. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

John Ruwitch is a correspondent with NPR's international desk. He covers Chinese affairs.