China is putting its integrity on the line by intervening in the stock market to try to reverse a decline, according to a top Chinese historian.
Recent market-boosting measures are forcing a one-way bet on the upside but imposing restrictions on the downside, potentially inviting a backlash, Zhang Lifan was quoted as saying by the Hong Kong Economic Journal.
Beijing’s strong hand is being magnified by supportive policies from various government agencies.
These include unlimited liquidity from the People’s Bank of China and a ban on share sales by state-owned enterprises.
The China Securities Regulatory Commission has ordered directors, supervisors and senior management of listed companies not to offload any holding to the secondary market for the next six months.
The Ministry of Finance, the China Banking Regulatory Commission and the China Insurance Regulatory Commission have also issued similar restrictions.
Meanwhile, the Ministry of Public Security is investigating any malicious short-selling.
Zhang said such market visibility by the government, although intended to resolve the crisis, could harm its own efforts undertake the most sweeping economic reform in 30 years.
Zhang warned that political opponents of President Xi Jinping and Premier Li Keqiang could use the market turbulence to shake up the upcoming meeting of the top communist leadership in Beidaihe.
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