China’s tumbling stock markets plunged even further today, intensifying fears the country was tail-spinning towards the biggest financial disaster since the 1929 Wall Street crash.
Almost $3trillion (£2trn) — more than the entire economic output of Brazil — has been wiped out since markets went into reverse just a few weeks ago, posing a bigger headache for many global investors than even the Greek debt crisis.
China’s government, regulators and financial institutions are now waging a concerted campaign to prop up the nation’s stock markets — a move that failed spectacularly in the 1929 crash that triggered the Great Depression.
The plunge in its previously booming stock markets, which had more than doubled in the year to mid-June, is a major problem for President Xi Jinping and China’s top leaders, who are already grappling with slowing growth in the world’s second largest economy and another bursting bubble.
‘The parallels with 1929 are, on the face of it, uncanny,’ wrote Jeremy Warner, economics commentator and assistant editor of The Daily Telegraph.
‘After more than a decade of frantic growth, extraordinary wealth creation and excess, both economies — America in 1929 and China today — are at roughly similar stages of economic development.