People's Daily, the official newspaper of the Communist Party, which begins its five-yearly congress in two weeks' time, printed a New China News Agency analysis yesterday which warned: 'If we do not put certain constraints on stocks, stocks will inevitably deal a heavy blow to normal economic order.' It was vague about what curbs were needed, but acknowledged: 'When the government regulates the market, it has a heavy responsibility. Any move must be made extremely cautiously.'
The 1,991 delegates who gather in Peking on 12 October are expected to deliver an unequivocal endorsement of the 'reform and opening up' economic policies of the 88-year-old supreme leader, Deng Xiaoping. The small band of hardliners in the leadership have no coherent alternative to Mr Deng's 'socialism with Chinese characteristics', but have used their influence within propaganda organs such as People's Daily to highlight some of the less fortunate effects of China's rush to get rich.
The newspaper, apparently seeking to enlist nationalist feelings, said yesterday: 'In today's stock market, some of the state- owned shares of some of the listed companies have been illegally seized by companies from outside our borders that have come and squeezed others out.' This was taken to be a reference to persistent rumours that Hong Kong and Taiwan interests have been playing the market in 'Class A' shares, which are supposed to be reserved for local Chinese.
The article went on to cast doubt on the accounts of some listed companies, and complained: 'When a stock market has too much speculation, it is easy to create a monetary illusion and form a bubble economy. If the stock market should collapse, it would inevitably rock society.'
While old-fashioned Marxists are loudest in their criticism, they are not alone in worrying about speculative excesses in China. With gambling banned and interest rates for savers extremely low, savings accounts have been drained to play the market, almost regardless of individual shares' merits. Last month there were riots in Shenzhen, near Hong Kong, over claims of inefficiency and corruption in the flotation of 13 new companies.
Some of the fever has cooled since May, when the exchanges in Shanghai and Shenzhen reached their peak. Since then they have fallen about 40 per cent. A Hong Kong-based analyst said yesterday there were widepread reports that there would be no new issues until 1993. The number scheduled for the second half of this year had already been halved from 13 to six.
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