The Economist: Stir-fry capitalism: Chinese Capitalism
CHINA'S stockmarket continues to hit record highs. Last week the benchmark Shanghai Composite index topped 5,000, a rise of 90% since the start of the year; and China's total stockmarket capitalisation now exceeds its GDP for the first time. This has been hailed in the Chinese media as marking progress towards a more advanced stage of capitalism. Others simply see it as evidence of a bubble.
The fact that China's shares are worth more than its GDP has little economic significance, since it compares a stock with an annual flow. And in any case, the value of tradable shares—that is, excluding those held by the government—is still only about 35% of GDP, compared with 150% in America or over 100% in India. …
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