Xi Jinping is said to be plotting an emergency intervention after China’s stock market plunged to a five-year low.
Chinese premier Li Qiang has demanded that authorities bring in “forceful” measures to control the crumbling economy.
It comes after China’s CSI 300 Index lost a fifth of its value over the last nine months and dropped to its lowest level since the start of 2019 on Monday.
The NASDAQ Golden Dragon China Index also fell for a sixth day in a row.
Xi Jinping is said to be plotting an emergency intervention after China’s stock market plunged to a five-year low
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Investor confidence is at a low following a property downturn, which began with the collapse of property giant Evergrande at the end of 2021.
Li held a meeting with China’s cabinet on Monday to discuss the need to boost the investment value of listed companies, Bloomberg reported.
Following the meeting, the State Council said it needed to improve macro policy to boost the nation’s economic recovery since the pandemic.
Despite China’s stock market jumping initially after the Government lifted its zero Covid lockdown policy, the bounce was not maintained.
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In a bid to boost the market, last year China’s $1.24trillion sovereign wealth fund bought exchange traded funds (ETFs) and bank shares.
Another 733billion yuan (£81billion) was also fed into the financial system by The People’s Bank of China.
Michael Hirson, an economist at 22V Research, said that China’s problems are deep-rooted.
“The biggest challenge that equity markets face is macroeconomic rather than technical,” he told Bloomberg.
China’s economy is facing a downturn in 2024 following the pandemic which the country never bounced back from
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“In an environment of weak private sector demand and prolonged deflation, it is hard to excite investors about the outlook for Chinese companies to grow revenue and profits.”
China is also facing a major demographic issue with its birth rate falling and its working-age population shrinking.
Its total population dropped by two million last year and more than a fifth of its population is now aged 60 or over.
