This In Focus note examines China’s recent stock market ‘crash’. It also considers events leading up to the crash, China’s response to the crash and the potential impact on the wider economy.
China’s Stock Market ‘Crash’ (179 KB , PDF)
In recent weeks, the value of China’s stock markets has plunged. After a twelve month rise, the value of shares in both of China’s main stock exchanges reached a peak on 12 June 2015, then fell severely, with the Shanghai Composite Index and the Shenzhen Composite Index losing 32 and 40 percent of their value respectively. According to the Washington Post, this wiped out $3 trillion in share value since mid-June, which is “more than the value of France’s entire stock market”. Commentator Timothy Lee observes that shares started to fall after 12 June 2015, the same date as the China Securities Regulatory Commission (CSRC) announced draft rules to cap margin lending in response to concerns about an equity bubble. The crash follows a year-long stock market boom, which some commentators have compared to the dot-com bubble of the 1990s. In the twelve months leading up to the crash, the Shanghai Composite saw gains of more than 150 percent. Likewise, in late-May 2015, the Economist reported that the Shenzhen Composite had tripled over the past year.
In recent days, China’s stock markets have shown signs of recovery, amid significant intervention by the Chinese Government to stabilise the markets. Over 9–10 July 2015, the Shanghai Composite saw gains of 10.9 percent—the biggest since 2008—while on 10 July 2015 the Shenzhen Composite also finished up 4.1 percent. These gains have continued into the following week, with the Shanghai Composite and Shenzhen Composite finishing up 2.4 and 4.2 percent respectively on 13 July 2015.
China’s Stock Market ‘Crash’ (179 KB , PDF)
This briefing is the fifth of a series on the post-war history of the UK economy. The series proceeds decade-by-decade from the 1950s onwards, providing an overview of the key macroeconomic developments of each decade. This fifth briefing looks at the 1990s. In this decade the UK economy settled into a period of low inflation and steady growth; however, living standards growth was lower and more regionally concentrated than in previous decades.
The Budget Responsibility Bill would require ministers to request an assessment from the Office for Budget Responsibility (OBR) for every major fiscal announcement and give the OBR the power to decide to publish one if the minister failed to request it. This follows the September 2022 ‘mini-budget’. The statement included plans that would have resulted in a projected £45bn reduction in tax income. It did not have an accompanying OBR assessment.
In November 2023, the Harrington review of foreign direct investment made recommendations about how the UK could attract more cross-border investment. The new Labour government has said tackling barriers to investment is a priority.
