200M Investors Weep! China Stocks Lose $2.4 Trillion—More Than S. Korea’s GDP; Financial Coup Ahead?

China's stock market entered the bear market on October 22nd. One female investor broke down sobbing on camera. I started with 300,000 yuan, and now I have just 8,800 yuan left. I lost another 200 yuan today. That's another day's pay gone. The CSI 300 index closed down 1.8% that day. It was down 20% from its June peak. The CSI 300 and the Hang Seng China Enterprises Index rank among the world's worst-performing major stock indexes this year. Both have fallen more than 10%, while most major global indexes have risen. The Shanghai Composite fell 1.48% to 3,658 on October 22. The Shenzhen Component Index dropped 2.96% to 11,357. The ChiNext Index plunged 4.37% to 2,576, falling below 2,600. It was down more than 40% from its June peak. The Star 50 Index fell 2.78% to 1,305, bringing its decline in the second half of this year to nearly 40%. The sell-off marks a sharp reversal Chinese stocks rallied in late 2024 as stimulus policies took effect. Bets on artificial intelligence then drove further gains, but when global technology stocks sold off, China's market was caught up in the downturn. China's A-share market has lost $2.4 trillion in value since its peak in May. The International Monetary Fund's 2026 World Economic Outlook projects South Korea's GDP at US$2.25 trillion this year and Canada's at US$2.49 trillion. The US$2.4 trillion wiped off Chinese stocks in five months falls between those figures. It is nearly equal to Canada's entire economy. Chinese investors have been sharing their distress on social media. This October really hurt me. I still haven't recovered. Whenever I have a moment to myself, I sit here and feel so sad. I think about all the money I've lost and everything I've been through these two years. I went to the hospital for another checkup today. Nothing is going right. The short dramas I make really do reflect real life. They really do. The more comments I read, the more I want to cry. We stock investors have it so rough. We lose money every day. I can't recover from these losses. I'm really close to having my positions liquidated. She said she was deeply upset and wanted to warn others. Anyone whose losses were still small should consider getting out. She wanted to stop trading too because it was taking too much of a toll on her health. As the Asia market remained volatile, photos and delivery order screenshots circulated on social media on October 23, 2026. They showed funeral wreaths bought and placed around the necks of bronze bull statues outside the Shanghai Stock Exchange and Shenzhen Stock Exchange. Wreaths were also placed at the entrances to both exchanges. One user on X wrote that funeral wreaths had been placed on the bull statues at the Shanghai and Shenzhen exchanges. The user warned that more public disturbances could follow unless the government propped up stocks. China's 250 million stock investors, the post said, had reached their limit. Bloomberg reported that pessimism had gripped China's stock market. Investors were confronting an economy weak enough to erode corporate profits, but not weak enough to trigger major new stimulus. The sell-off was deepening, with no end in sight. Asia Times cited several reasons for China's bear market. One major factor was persistently weak consumer spending and real estate. Six years of falling property values, youth unemployment near record highs, and deflation have put heavy pressure on households and businesses. External pressures are also mounting as the AI investment boom cools. The Shanghai Composite briefly fell below 3,600 on October 23rd, hitting a recent low. It then staged a V-shaped recovery. State-backed funds, known as the National Team, poured money into broad-market exchange-traded funds to support prices. Leading technology stocks also surged in the afternoon. The index finished up 0.89% at 3,690. The turnaround came when sentiment was at its bleakest. Many investors felt such a sharp V-shaped rebound was unusual. These wild swings in A shares, these reversals, and the contrast between banks and other sectors feel like a game. They have nothing to do with business fundamentals. Some stocks swung about 8% from low to high today. Next week, the market will have to absorb more selling. Every day is torture. Today's low was 3,574. For now, we see that as a short-term bottom. Someone clearly doesn't want it to fall any further. This afternoon's rally was very strange. The three leading stocks in co-packaged optics, or CPO, all released announcements at noon. Those three companies rarely do that. This was clearly deliberate. One blogger was reminded of China's 2015 stock market crash. When it fell to 3,800, I cried. When it hit 3,700, I started laughing. At 3,600, I just went silent. Then it bounced back to 3,700. The blogger said the day's rally simply meant the institutions had finished selling their holdings. The government's immediate priority, the blogger said, was to keep the shift from a bull market to a bear market from becoming another crash like 2015. China's stock market suffered a severe crash in the summer of 2015. The Shanghai Composite peaked at 5,178 on June 12, 2015, then plunged to 2,850 by August 26. Its maximum decline breached 45%. The ChiNext Index peaked at 4,037 on June 5, 2015, and fell to 1,779 by September 2, a maximum drop of 55.9 percent. Repeated waves of panic selling sent more than 1,000 stocks, and sometimes as many as 2,000, down by their daily trading limits in a single day. Trading was suspended at large numbers of listed companies. Authorities then committed a trillion yuan to rescue, but stocks in both markets kept plunging. About 5 trillion U.S. dollars in market value was erased. At the time, rumors spread that the crash was a financial coup. The rumors accused factions opposed to CCP General Secretary Xi Jinping, including allies of former CCP General Secretary Jiang Zemin, of coordinating malicious short-selling. The propaganda apparatus, controlled by then-Politburo Standing Committee member Liu Yunshan, repeatedly challenged Beijing's rescue efforts, calling them ineffective. After the crash, Xi Jinping's administration launched corruption investigations across the financial and securities industries. Officials targeted suspected financial insiders accused of insider trading, malicious short-selling, and colluding with outside forces. Senior executives at CITIC Securities, China's largest brokerage and a participant in the rescue, came under investigation one after another. They included General Manager Cheng Bo-min, Chairman Wang Dong-min retired, securities regulator officials Zhang Yijun and assistant to the chairman and vice chairman Yao Gang were also brought down as suspected insiders. Private fund manager and financier Xu Xiang saw his fund's net asset value surge while countless stocks hit their daily loss limits during the crash. Police later arrested him on the Hangzhou Bay Bridge in Ningbo. He was sentenced for market manipulation and insider trading. Xiao Jianhua, head of the Tomorrow Group, controlled the vast financial empire. He was later taken from Hong Kong to mainland China for investigation. His core assets were subsequently taken over, broken up, or liquidated in bankruptcy. Former Anbang Insurance Group chairman Wu Xiaohui was accused of using financial leverage and stock market volatility to take part in high-level political power struggles. He was later sentenced for fraudulent fundraising and embezzlement. Authorities subsequently took over at Anbang. One vlogger who lived through China's 2015 crash questioned the unusual market moves in 2020. Ask me about this kind of market. I know it very well. The cycle in 2015 looked just like this. Among people born in the 1990s, I was one of the first to get into stocks. I was barely 19. Back then, people kept urging us to buy and misleading us. We were putting money in because of an emotional appeal. The blogger said many influential online figures publicly urged people to buy stocks at the time. Some had net worths of tens of millions of yuan. When small investors lost money, they would do anything to win it back. Looking back, the blogger said, the setup had not changed. Only the methods. Everyone needed to look after themselves. I want to tell everyone this. The more extreme things get, the more you need to stay calm. See clearly what's happening around you. Don't keep making mistakes until you can never recover. Don't borrow money, don't buy on margin, don't use leverage, don't trust off-exchange deals, don't trust options. China analyst Yang Bo said the latest small rebound had also been engineered. Like the rally in 2015, he described it as a policy-driven bull market forced higher by the authorities. He said the aim was to draw roughly 170 trillion yuan in personal savings into stocks. If the volatility continued, he said, the outcome would likely resemble the 2015 crash. Vlogger Wang Changniao said this year's A share losses were comparable to 2015 and 2022 and amounted to a market crash. The Shanghai Composite was down to just 3,600. The CSI 300 had fallen for a record 11 straight weeks. The Chi Next Index had plunged 40% in four months, a crash-level decline. It was approaching the level where the rally began on September 24, 2024. Writer Cui Chenghao posted on X that global stocks had repeatedly hit new highs in recent years, yet Chinese stocks kept moving between 3,000 and 4,000, falling more often than rising, and frustrating investors. He said the properly functioning capital market should not have a national team. He questioned whether its activities amounted to market manipulation, whose money it earned when it profited, and whose money was lost when it failed. He added that annual reports from many companies showed the supposed leaders of the rescue were among the first to cut their holdings. On October 24th, long-time investor Andy Wang gave her view of the volatility ahead. How low will it go next week? It will fall further. Will it keep swinging up and down by about 3% next week? More than that. One blogger offered this analysis on October 24th. The market may still be tough going forward. It doesn't matter whether you are fully invested or holding no stocks, whether you jumped in today or plan to jump in next week. Chinese authorities have moved to ease selling pressure and stabilized stocks, but Bloomberg's analysts said buying by state-backed funds alone might not be enough for lasting recovery. Persistently weak sentiment could cancel out the benefits of those purchases. Daily trading value in China's mainland stock markets has remained near its lowest level in about 15 months. Outstanding margin loans have fallen to their lowest level since late 2025, highlighting investors' declining appetite for risk. Ho Min Lee, a senior macro strategist in Singapore at Swissbank Lombard Odier, said investor sentiment remained very weak in both mainland and offshore Chinese markets. Without fresh policy support or a catalyst in technology, this volatile market with no clear direction could continue into early 2027. China's stock market has failed to benefit from its progress in the AI race. Chinese companies including DeepSeek and Moonshot have released new AI models, yet the CSI 300 has fallen 11% this year, while stocks in Taiwan and South Korea have risen 59% and 31%, respectively. At the close on October 22, Chinese AI companies Minimax and Zhipu had lost a combined $150 billion in market value from their respective peaks. Both stocks rebounded on October 23, but recovered only a small fraction of that roughly $150 billion loss. Minimax released its new M3.1 Flash model on October 19. It sharply reduced the cost of processing tokens and improved performance, but failed to lift the company's share price. The market response was similarly muted when Zhipu AI released GLM 5.3 Flash X in September. Chinese stocks had already lost momentum before the latest global sell-off. Several highly anticipated listings by chip makers and robotics companies briefly lifted sentiment. Even so, China's benchmark stock indexes have fallen more than 15% since August. Indexes tracking the technology-heavy star market have lost more than 40% this year. Nikkei Asia cited an October 23 report by Nicholas Gui, a portfolio strategist at Canada's RBC Wealth Management. He attributed the sell-off to insufficient fiscal stimulus in China and weaker-than-expected corporate earnings. Stock valuations had surged on optimism about AI and government support. Without a major stimulus package, he said, those valuations could fall further. The volatility could continue into early 2027. China's stock market has long been viewed as driven by politics. It is tied to the CCP's efforts to maintain stability and even to the mindset of CCP leader Xi Jinping. Former securities regulator chairman Xiao Gang once said China's top leaders based market rescues on their own psychology, rather than business fundamentals or scientific evidence. The leadership's target is said to be 3,000 on the Shanghai composite. Outside experts saw this as confirmation that Xi Jinping had taken over financial policymaking and rejected professional advice. They attributed China's current economic difficulties entirely to his mismanagement. China's stock market has suffered repeated turbulence since 2024 and 2025. State-backed investors known as the national team have intervened forcefully several times. They include Central Huijin, China Securities Finance, and large foreign investment funds. Their buying stopped panic selling in the short term, but drew widespread criticism. Critics said administrative intervention and state-directed buying distorted the market and caused numerous negative effects. The Wall Street Journal previously reported that Xi Jinping's centralized decision-making style had repeatedly led to abrupt policy shifts. This made the CCP government's economic policies opaque and unpredictable, potentially increasing the risks of investing in China. Independent commentator Du Zheng said state-backed buying in October 2026 might be linked to efforts to maintain economic stability around the CCP's Fifth Plenum. He said the party would not allow sharp stock declines before or during the meeting, so state-backed funds would support prices. In his view, the meeting offered a good opportunity to sell A shares. Stocks would probably fall again afterward. In another development related to market stability around the Fifth Plenum, users were barred from following economist Ren Zeping's public WeChat account on October 24th for violations. The specific reason was unclear. The account had still been posting the day before the restriction, as Chinese stocks swung unusually ahead of the meeting. His last article was titled The Market Has Bottomed and the Rebound is Underway. One user wrote, he said the market had bottomed, and the very next day his account was restricted. The timing is ironic. People who tell everyone where the market is going face no consequences when they are wrong, but the people who follow them are risking real money. Independent commentator Du Zheng said the CCP's propaganda controls now allowed neither bullish nor bearish commentary. He said the political climate was more sensitive than in the previous two years. The fifth plenum in late October would focus on party discipline and internal consolidation. Reports of investigations into senior officials had continued, while local leadership changes were underway. Officials were jockeying for positions ahead of the CCP's 21st National Congress. Xi Jinping had purged many senior officials over the past three years. Du suggested their former subordinates, relatives or friends might try to influence politics by engineering a market crash, a kind of indirect financial coup. He said this gave the authorities further reasons to use state-backed funds to support stocks. U.S.-based economist Li Hongqing said state-backed buying could stabilize stock prices temporarily, but could not fix the underlying lack of confidence. He said the national team, including state-owned companies and social security funds, used public money mainly to maintain an appearance of prosperity before political meetings. The risks could ultimately pass through the public finances to taxpayers. The stock market slump comes after three years of economic stagnation in China, amid disruption caused by the CCP authorities' policies. China analyst Wang He said the economy had long been trapped in a deflationary cycle. Corporate profits kept falling, consumer spending was weak, and domestic demand was severely lacking. Real estate remained depressed, while local government debt weighed heavily on local economies. Other problems include private business closures, foreign companies leaving, sharply shrinking investment, falling births, widespread job losses, and declining government revenue. All of these factors directly affected stocks. In a previous commentary, China Aid said the stock market's persistent problems had the same roots as China's other chronic problems. a lack of the rule of law, freedom, and human rights. It said the CCP used its power to stimulate markets and create artificial bubbles, enticing and misleading people into spending their money to support the market and buy shares others were selling. The group said this would bring repeated waves of severe hardship.