China media: Stop the plunge, but don't intervene

http://www.bbc.co.uk/news/world-asia-china-34048636

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Whenever China's stock markets tumble, state-run media outlets rush to defend the government's policies and boost investors' confidence.

Chinese stocks fell again on Tuesday, a day after their worst plunge since 2007 caused market losses around the world.

Similar to previous occasions of market volatility, several state-run papers have urged investors not to engage in panic selling.

But this time some papers appear to have gone a step further and requested the government to not intervene in the market.

'Step out, not in'

The government has intervened in financial markets in recent months to try and maintain growth momentum in the economy. It recently allowed its main state pension fund to invest in the market for the first time.

But some experts feel that is not the right approach.

"There is a cycle in [the] stock market and it is very difficult to rely on the government to stabilise the market," Cao Fengqi, a financial expert from Beijing University, says.

An article in Xinhua's Economic Information Daily urges that the authorities "should not create new risk factors" by intervening in the stock market.

"The authorities should slowly step out of the policy of rescuing the stock market. The purpose of the government's intervention is to control financial risks and not to lift up the equity market," says the article.

An article in the China Daily agrees that policymakers should not "shore up equity prices at any cost".

"Instead, policymakers should try to find a workable middle path after first identifying the real causes behind the plunge of share prices," says the daily.

'Full confidence in economy'

The global sell-off has been driven by fears that China's slowing growth might pull down other economies. But editorials and commentaries backing China's economy are not in short supply in Chinese papers.

The Global Times has urged investors "to not be swayed by some unusual short-term jitters in the stock markets or exchange markets".

Lin Zuoming, Executive Director of Aviation Industry Corporation of China, writes in the Chinese edition of the Global Times that he has "full confidence in China's economic future".

An article in the Beijing News, disagrees with a widespread view that the devaluation of the yuan by China's central bank caused the tumble by spooking investors.

It says a cheaper yuan "is beneficial for the global economy".

Other papers, including the National Business Daily, blame the anticipation of a rate hike by the US central bank as one of the culprits for the uncertainty in the stock markets of world capitals.

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