BEIJING (Reuters) - China’s wild stock market rout is a challenge not a crisis, say people close to the country’s leadership.
But at the sharp end, among the millions of often retired, small retail investors who account for around 85 percent of market trading, the mood is less sanguine.
“China is not about to become the next Greece. You are too pessimistic,” one individual close to the leadership in Beijing told Reuters, referring to foreign media and detractors. “We still have many policy tools we can use.”
As the CSI300 index .CSI300 of the largest listed stocks in Shanghai and Shenzhen fell 6.8 percent on Wednesday - it has lost close to a third of its value in less than a month after more than doubling in the previous seven months - Chinese President Xi Jinping flew off to attend summit meetings in Russia, with his central bank governor in tow.
Xi and Chinese Premier Li Keqiang have maintained a silence, at least in public, over the stock market slump, and that is beginning to rile many of those who have seen precious life savings whittled away.
Hong Kong’s South China Morning Post said Li chaired a weekend meeting of the State Council, or cabinet, to work out “measures to counter the forces taking the market on its wild ride.” But late on Wednesday, a summary of the weekly cabinet talks led with a $40 billion package for weak parts of the economy and an acceleration in building roads and water conservancy facilities. It made no mention of the stock market.
A slew of support measures unleashed by the government has done little to stem the tide of selling, though even after the recent rout the main stock index is still nearly 4 percent above its end-2014 level.
“It is no small challenge,” said a second person with ties to the Chinese leadership, referring to government attempts to bolster the market. “But it cannot be considered a crisis at this juncture.”
A third person with leadership ties - the sources asked not to be named to avoid any repercussions for speaking to foreign media without authorization - said there was cautious optimism that markets would rebound with further support measures, but he gave no details or timetable for implementation.
While Chinese policymakers generally have a sound record on economic decision-making, the stock market has historically underperformed the economy and remains an embarrassing exception to claims of economic confidence.
The sources said the leadership’s silence on the market falls was deliberate.
“If they had commented, it would be a sign the problem is really serious. And they could be accused of intervening in the market,” said the third individual. “If it were a real crisis, Xi would be forced to cancel his trip,” the first person added.
“If this goes on the whole country will go into chaos, the people will go into chaos,” said Mr. Lin, a 75-year-old pensioner who said the market fall has wiped out all but a third of the 230,000 yuan ($37,045) in his stock trading account.
A member of the Communist Party for half a century, Lin said he contemplated suicide because he had worked hard for decades to build up his savings little by little.
Lin was among a crowd of pensioners gathered in the dim hall at a brokerage in central Shanghai on Wednesday. Staring glumly at outdated computer screens showing selected stocks, several said they felt bitter and wanted the government to do more.
“Just don’t lie to me. A bull market is a bull market. This is a bear market. Just don’t tell me it’s going to be a bull market,” said Luo Huimin, 65.
Mr. Zhu, 73, said he put his 500,000 yuan life savings into the market and has lost around 60 percent of that. “I don’t know whether to laugh or cry,” he said.
Others said they were having to cut back on spending as their savings are used to supplement a monthly state pension of around 1,000 yuan. “I just feel numb,” said 70-year-old Ni Zhengfang, who said she has lost about 15 percent of her account.
“Now it’s impossible to maintain a decent living after my retirement. I’ve lost 200,000 yuan in the market,” said Ms. Zhang, 65, who said she and her sister invested more than 700,000 yuan into their trading account.
“Can we still trust the Communist Party?” she asked, adding she fears for the strain on her heart.
Additional reporting by Pete Sweeney in BEIJING and Shanghai newsroom; Editing by Ian Geoghegan