China has let the genie out of the bottle and does not know how to push it back in again. So should the authorities just let markets adjust? Such an adjustment might wipe out the savings of many households, as a large proportion of China’s stock market is in the hands of retail savers. Or should the authorities intervene and, for example, put limits on share sales? This would preserve financial stability and the nation’s wealth at the costs of international credibility.
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