The harrowing saga of Greece’s future in Europe had one positive: it distracted the world’s attention from the colossal meltdown of Chinese stock markets and the government's clumsy attempts to arrest the decline.
Friday marked the second consecutive day of strong gains on China's main equity markets, suggesting the weeks-long plunge in share prices may have found a bottom. That will depend on the retail investors’ confidence in Beijing, as the reversal was engineered by an array of measures that show China is a long way from embracing free-market economics.
The decision of the People’s Bank of China to inject more than $5 billion (US) into the financial system, cut interest rates, and loosen margin requirements was standard enough, drawing comparisons to the "Greenspan put." The measures that followed would have shocked the libertarian values of the fathers of free-market economics. Trading in more than 1,400 stocks was banned and shareholders with large stakes in companies were told they could not sell for six months. Some companies were ordered to start buying shares.