A heated debate kicked off when China’s government intervened heavily in domestic stock markets that plummeted by more than one-third in mid-June, after doubling in value in the previous 18 months. Some market participants have lamented the risk associated with the Chinese Communist Party’s (CCP's) interference since it stopped market forces from restoring equilibrium independently. But the institutional failures that led to the market's downfall in the first place should also be addressed – as should the question of how better-timed intervention could have been beneficial, if not necessary.
The government’s intervention in the stock market was profound. Some of the measures included easing margin financing regulation, the suspension of approved initial public offerings, freezing new share offers, setting up a market stabilisation fund, and making it illegal for large investors to dump shares over the next six months.
