While most recent financial news has focused on the crisis currently facing Greece, another disaster is stirring further east that makes Alexis Tsipras's problems look like chicken feed.
Since the middle of June, the prices of Chinese company shares have fallen by 30 per cent. That amounts to around $3.2 trillion dollars that has been wiped off the stock market in only a few weeks.
It's hard to make sense of such a huge number, but this figure is higher than the UK's GDP in 2013, a comparatively modest $2.7 trillion.
The sudden drop in prices came after months of solid growth. Since November last year, Chinese stocks had more than doubled, largely due to small retail investors - 'mum and dad' investors playing the stock market - using borrowed money.
There are concerns that the Chinese government's response could be partially responsible for the sell-off.
China's extraordinary 'nail houses'
China's extraordinary 'nail houses'
1/8 Nail houses in China
A general view shows the demolition of a 'nail house', the last house in the area, at a construction site in Guangzhou, Guangdong province. The owners of the house had filed but lost a lawsuit against the developer of the land to seek more compensation before agreeing to the demolition of their home. The land will be used for a high-rise apartment project. Chinese media have since seized on disputes between developers and owners of so-called 'nail houses', whose owners have stuck to their ground and resisted demolition, holding up development projects in the world's fastest-growing major economy
2/8 Nail houses in China
A half-demolished apartment building standing in the middle of a newly-built road thanks to a Chinese couple that refused to move in Wenling, in eastern China's Zhejiang province. Luo Baogen, 67, and his 65-year-old wife have waged a four-year battle to receive more than the 41,300 USD compensation offered by the local government of Daxi, a Chinese newspaper said. The phenomenon is called a 'nail house' in China, as such buildings stick out and are difficult to remove, like a stubborn nail
3/8 Nail houses in China
A 'nail house', the last building in the area, sits in the middle of a road under construction in Nanning, Guangxi Zhuang Autonomous Region. According to local media, the owner of the house didn't reach an agreement with the local authority about compensation of the demolition
4/8 Nail houses in China
A three-storey 'nail house', the last building in the area, with a Chinese national flag on its rooftop is seen in the middle of a newly-built road in Luoyang, Henan province. According to local media, the house owner did not agree with government's compensation plan for relocation and refused to move out
5/8 Nail houses in China
A six-floor villa is viewed on the construction site in the central business district of Shenzhen. Choi Chu Cheung, the owner of the villa, and his wife Zhang Lian-hao, refused to accept the compensation offered by the developer who plans to build a financial centre on the site. The couple are demanding that the developer compensate them with property similar in size or raise the offer from 6,500 yuan ($840) to 18,000 yuan ($2,327) per square metre
6/8 Nail houses in China
A 'nail house', the last house in this area, stands in the centre of a construction site which will be developed as a new apartment zone in Chongqing Municipality. The owners of the house insist in seeking more compensation before agreeing to the demolition of their home, local media reported
7/8 Nail houses in China
A view of where 75-year-old Yao Baohua's house (C) still stands in the rubble of a vast development site in the city of Changzhou in China's eastern Jiangsu province. The Yao home is the last one standing in the rubble of a vast development site in Changzhou, a Chinese 'nail house', the moniker earned for both their physical appearance and their owners' stubborn resistance
8/8 Nail houses in China
Chinese authorities carry sticks as they stand guard while workers demolish houses which are claimed illegal by the local government in Wuhan, central China's Hubei province. Land seizures have been a problem for years in China, and have given rise to the term 'nail house' to describe a holdout tenant or occupant, likening them to a nail refusing to be hammered down, and violent resistance has been reported in numerous cases as ordinary people take matters into their own hands to resist eviction they deem unfair
Acting quickly to prevent a crisis by ordering brokerage firms to keep buying shares, suspending new share offerings, and keeping people from selling shares, the Government may have unintentionally provoked panic, with their large-scale response sending signals to inexpert investors that things are going wrong and it's time to take their money and run.
According to the BBC, around 80 per cent of investors in Chinese stock markets are small investors - individuals just looking to make a little money on the stock market.
Last year, the Chinese government, through its media outlets, encourages citizens to start buying more stocks, in an effort to boost the market. The campaign appeared to have an effect, but now it's causing more problems for the market.
Some commentators worry that these investors largely base their decisions on a herd mentality - and if people's friends and family start selling, it doesn't take much for a domino effect to occur where a lot of these investors start getting out of the market en masse.And while the rapid growth of the Chinese stock markets was a source of pride for the government and the nation's financial industry, it could have played a part in the current sell-off. Many investors, seeing the prices of their shares rocket in a fairly short period of time, were happy to take their money and get out once things started getting difficult. Again, as more investors do this and the stock market begins to fall, the effect is amplified.
Today, Chinese stocks continued to plunge, with CNN reporting that the Shanghai Composite plunged by eight per cent when the market opened this morning.
In a statement, the China Securities Regulatory Commission said: "At the moment there is mood of panic in the market and large increase in or irrational dumping of shares, causing a strain of liquidity in the stock market."
Despite the best efforts of these regulators to increase liquidity and restore investor's confidence, stock markets continue to fluctuate wildly, and many companies are suspending their shares, preventing them from being traded amidst the panic.
As of today, around 1,400 of the 2,800 companies traded in the country have decided to pull their shares to avoid taking damage.
However, it's a temporary fix, and when they resume trading, their problems could surface again.
Unless they manage to calm things down, China could be looking at a major downturn after months of massive growth.Reuse content