Staggering Data on Growth in Chinese Markets

The growth in Chinese stock markets — and the Chinese economy in general — continues to be fairly staggering:

China’s stock market topped $1 trillion for the first time and the yuan rose past the Hong Kong dollar, reflecting an economy that’s grown 10-fold since Deng Xiaoping opened the Communist nation to international investment in 1978.

The value of shares on the Shanghai and Shenzhen stock exchanges more than tripled in the past year and reached $1.01 trillion as of yesterday’s close, according to data compiled by Bloomberg. The yuan climbed to more than 1 per Hong Kong dollar today for the first time in 13 years.

Economic growth has averaged 9.6 percent in the past five years, driven by record trade surpluses that pushed China’s foreign-exchange reserves to $1 trillion. That’s prompted U.S. and European pressure for a more flexible yuan and made China’s stocks the most expensive relative to earnings in Asia.

… China’s economy grew 10.7 percent in the first nine months of last year after overtaking the U.K. and France in 2005 to become the world’s fourth largest. The government is scheduled to announce 2006 growth figures on Jan. 25.

… After tripling in size, China’s stock market capitalization is equal to 46 percent of the $2.2 trillion economy. The U.S. market is equivalent to 126 percent of its economy, while the ratio for Hong Kong is 649 percent, according to Bloomberg data.

The last factoid caught me by surprise. Despite trading at 34 times earnings, Chinese stock markets are still a relatively small percentage of GDP. There are many ways to look at this, of course, some much more bearish than others, including currency-related and the State’s still large role in the Chinese economy.

[via Bloomberg]


  1. I do not understand the significance of the ratio of a country’s stock market value to its total GDP. Does this measure anything more (and only very roughly at that) than the percentage of publicly traded companies as against the percentage of non-publicly traded companies? And what about the fact that so many of the HK listed companies are actually Chinese companies and so many US listed companies are foreign companies?

  2. I would be interested in percentage figures on communal ownership where enterprises are not owned by the central government but yet are not privately owned either.
    Rural community cooperatives probably comprise a large portion of the GDP. Older forms of communist organization still exist widely, particularly in rural areas, truly where the greatest potential for growth lies as well. Needless to say these are not publicly traded…