Editors note: Investors across China put their money into the Chinese stock market last year and this year largely because of promises by official media outlets. People’s Daily and other publications reported that the Chinese bull market would help to realize the great rejuvenation of the Chinese nation, the much-vaunted “China Dream.” Beginning last December, the writer of this article, a senior journalist with the publication China Business News, joined a QQ chat group of high-end stock market speculators. Many in this group borrowed up to 10 million yuan (US$1.62 million)—several times their own capital—to speculate with. This is the story of how they lost everything in China’s market crash. This is an abridged translation of Zhou’s July 18 opinion piece, which was shared widely on the Chinese Internet.
“This is the slaughter of the middle class,” Mr. Hao, a financial investment adviser in Chengdu, said on July 15. “Of my friends, even those who have borrowed the equivalent of their cash, at a 1:1 ratio, have received margin calls from their financial firms. They lost the entire wealth they accumulated in the past 10 years. We estimate that at least 500,000 to 600,000 middle-class investors have been eliminated in this round of the stock market plunge!”
The Chinese stock market crash that started in mid-June purged the wealth of investors who used margin accounts, borrowed money with securities as collateral, to invest in the stock market. During the previous six plus months, they had been in a state hyper-excitement as the Shanghai Composite Index more than doubled from Aug. 1, 2014 to June 12, 2015, while the Shenzhen index nearly tripled.
