Some Thoughts on Chinese Stock Market – Based on its disconnection with real economy in contrast to real estate market

Abstract

The discussion starts from the fact of the extremely low correlation between the performance of Chinese stock market and the real economy. The author aims to exhibit a relatively
comprehensive view of Chinese stock market (as well as the related economic factors) and
analyzed the causing factors for the low correlation from different angels. Besides the tests
which signify the low correlation of stock market to real economy (with real estate being the
contrasting group), mainly qualitative methods are adopted in analyzing and explaining the
results of low correlation from different perspectives. The conclusion is that stock market is
not the optimal option for driving Chinese capital market, and policy suggestions are also
given in this paper.