What is China Doing to Its Stock Market and Why? A Hypothesis.

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Win the battle, lose the war. Pyrrhus of Epirus, Greek king and statesman in 270 BC

The U.S. stock market is thriving, while China’s deteriorates. China could intervene to limit stock market losses, but it is not. Is China purposely losing a battle to win a war?

While the U.S. stock market continues to reach new highs, doubling in value since the March 2020 low (the fastest and largest correction on record), China’s stock market is in the doldrums. The S&P 500 index returned 20% this year through mid-August, while China’s A50 index lost 15%.

Pundits attribute China’s stock market struggles to two factors – its central bank has withdrawn cash from the markets, and its government has stepped up regulations affecting the education and technology industries.

The Chinese government appears to want a stock market correction. So, why are those guys going in the opposite direction of the U.S.?