China’s Stock Surge Defies Weak Economy, Raising Fears of Another Bust: Analysts

‘Housing is no longer viable, so the government is shifting the game to equities. They want savers to become stock investors,’ a China-based analyst said.

A woman leaves the Stock Exchange building in Shanghai, China, on Nov. 4, 2020. Hector Retamal/AFP via Getty Images

China’s stock market has shown recent strength, while the rally stands in stark contrast to the country’s sputtering economy, where property prices are falling, consumer demand remains weak, and key indicators of the economy consistently undershoot expectations.

On Aug. 18, the Shanghai Composite Index briefly surged past 3,745 points, its highest level in a decade. China’s CSI 300 Index is up nearly 8 percent this year, and daily trading volumes recently exceeded 2.7 trillion yuan ($370 billion), the third-highest on record.