The Shanghai composite stock index has lost more than a quarter of its value since early June, after more than doubled in the preceding year. Government intervention meant to prop up prices has so far failed to stabilize stocks or restore public confidence. In the second part of a three-part series, Paul Haenle and Carnegie’s Yukon Huang discuss the roles that the state and market forces play in China’s transitioning economy, particularly with regard to the country’s equity market.

Yukon Huang explains that although market forces are indeed freeing up the prices of goods, interest rates, and capital flows in China, these reforms do not imply that the state will relinquish its ownership over key raw material supplies or strategically important state enterprises. Huang maintains that China’s leaders remain committed to deepening and strengthening the country’s capital market so as to achieve their goals of internationalizing the renminbi and strengthening Chinese influence on the international financial system. 

Yukon Huang

Yukon Huang is a senior associate in the Carnegie Asia Program. His research focuses on China’s economic development and its impact on Asia and the global economy.

Paul Haenle

Paul Haenle is the director of the Carnegie–Tsinghua Center for Global Policy. Prior to joining Carnegie, he served from June 2007 to June 2009 as the director for China, Taiwan, and Mongolian Affairs on the National Security Council staffs of former president George W. Bush and President Barack Obama.