Lessons to learn from Chinese IPO boom in US
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Other concerns may highlight certain key flaws existing in Chinese capital markets. Insider trading, fraudulent accounting and a few rapacious financial agents help create an inefficient market that functions, according to certain economists, more or less like a chaotic casino.
Thus it is understandable why the vicissitude of Chinese stock markets has little correlation with the growing national economy. It is also understandable that this unpleasant market repels entrepreneurs looking for stable and sustainable long-term profit margins.
The capital returns in China's real economy in recent years have been noteworthy.
These might have emerged from capital flows that are tilted against the labor force, environmental costs not taken into account on balance sheets, and rampant consumer growth. But with these excessive profits being translated into overseas stocks, US shareholders are reaping Chinese capital returns.
These should have been channeled back into the Chinese economy to help deal with the welfare deficit that has resulted from the country's economic activities.
The worrisome status quo may dent our optimism about China's economic viability.
China should figure out a way to keep those promising companies at home. Lowering the threshold of the stock market, clamping down on financial irregularities and white-collar crimes while allowing innovation to burgeon will go a long way toward achieving this goal.
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