Mainland Accountant: Chinese Communist Party Uses Stock Market to Siphon off People’s Savings

Recently, the Chinese stock market has been turbulent. On the evening of October 20, 23 listed companies in Shanghai and Shenzhen issued announcements stating that they will use bank loans they obtained for stock buybacks or holdings. A senior accountant from mainland China warned that this is a trap, and the Chinese Communist Party is using the stock market to extract deposits from the public in order to meet this year’s GDP growth target.

On the evening of October 20, 23 listed companies in Shanghai and Shenzhen announced that they had signed loan agreements with banks to obtain loan limits for company stock buybacks and holding plans. These 23 companies include Sinopec, China Merchants Shekou, China Shipping, China Cosco Shipping Energy Transportation, China Cosco Shipping Development, among others, with a total loan amount sought for buybacks and holdings reaching nearly 11.5 billion yuan.

Among them, Sinopec signed a credit agreement with Bank of China to obtain nearly 900 million yuan in loans for stock buybacks; China Merchants Shekou secured a 702 million yuan loan from China Merchants Bank to support stock buybacks, and others.

On the same day, Zhejiang Merchants Securities from mainland China claimed that the downward trend in the stock market over the past 8 days had ended. It is highly probable that there will be a corresponding rebound towards 3674 points in the future.

However, Ms. Yu, a senior accountant from mainland China, expressed pessimism about the new surge in the stock market being labeled as a “bull market,” cautioning that there are traps behind it.

On October 21, Ms. Yu told Epoch Times that the recent sharp rise and halt in the Chinese stock market is manipulated by the Chinese Communist Party, stating, “The entire Chinese stock market is a scam, but many people cannot see the trap, like outsiders. Those of us within the system also know that the government is using the stock market to extract deposits from the public to achieve the 5% GDP growth target this year.”

She said, “Now that it’s the fourth quarter, they see that they won’t be able to achieve the around 5% GDP target set by the top leaders this year. What can they do? The economy is struggling, the real estate sector is not performing, and the three drivers of GDP growth – investment, consumption, and exports – have all stalled.

“They are eyeing the deposits of the public, thinking that people have money in their pockets that they are not spending. So, they have come up with some schemes to urge people to take out their money, speculate in the stock market, and then boost GDP a bit.”

According to data from the People’s Bank of China, by the end of 2021, the total amount of household deposits in China reached 103 trillion yuan.

“Dongfang Hong Asset Management” in mainland China released its “Fourth Quarter 2024 Equity Strategy Outlook,” indicating that the total deposit balance of Chinese residents has increased from 103 trillion to 147 trillion yuan.

Ms. Yu said, “So recently, including the top leaders, the central bank, the Ministry of Finance, etc., have all come forward to endorse the stock market, saying they will inject an initial 500 billion yuan of incremental funds into the stock market and another 500 billion yuan in the future, enticing the public to enter the market. However, in reality, they haven’t actually taken out all these funds at once, but are gradually taking them out bit by bit.”

On September 24, the People’s Bank of China announced a series of heavyweight monetary easing measures, including significantly lowering the interest rate range and injecting 1 trillion yuan of liquidity into the financial system.

On September 26, the Political Bureau of the Chinese Communist Party held a meeting, committing to deploy “necessary fiscal expenditures” to achieve this year’s approximately 5% economic growth target and acknowledging new issues in the economy.

From September 24 to 28, the stock market surged continuously for 5 consecutive working days. The Shanghai Composite Index surged from around 2750 points to 3200 points, a 25% increase within 5 days of trading.

Millions of individual investors believed the so-called “bull market” propaganda from the CCP and entered the market, including several million new investors.

During the National Day holiday, the A-shares market was closed for seven days. Many securities firms gave up their holidays and began working overtime, providing 24-hour account opening and consultation services for investors.

A couple from Yantai, Shandong, expressed optimism about the market on social media and invested their recently raised 1 million yuan, intended for mortgage repayment and other purposes, into the stock market on October 8.

One internet user on Douyin recounted, “There was an older brother who was too crazy, he had several villas, large flats, a dozen commercial properties, plus leverage, with over a billion in cash, and on October 8, he invested everything in the stock market. Lost 60% in a few days. Completely shocked.”

It is reported that millions of new retail investors primarily opened online accounts, with the main account holders being born in the 1990s and 2000s, with some from the 1980s.

On the first day of the National Day holiday, October 8, the stock market surged again. The Shanghai Composite Index opened high, up 337.9 points, a more than 10% increase. In just 20 minutes of trading, the total turnover in Shanghai and Shenzhen exceeded 1 trillion yuan, setting a historical record for the fastest trillion mark. The total turnover for both markets that day reached 3.45 trillion yuan.

However, after experiencing 6 consecutive trading days of surging, the A-shares market began a series of steep declines, causing heavy losses for retail investors on October 9.

Ms. Yu said, “Under the party-state system, Chinese people are only focused on chasing profits and money. There aren’t many other investment options now, and many people are unemployed with no financial resources. They also cannot see that the Chinese stock market is a scam. Therefore, going for quick gains, they are willing to sell their homes, take out loans, hoping to make a profit in the stock market, but end up falling into a trap.”

On October 17, the Ministry of Housing and Urban-Rural Development of the CCP once again issued new measures to ‘rescue’ the real estate market, promising to increase the loan quotas for unfinished residential projects by nearly double, reaching 4 trillion yuan.

However, on that day, the three major stock indexes in A-shares all closed down, with the Shanghai Composite Index falling below the 3200-point mark; many real estate stocks plummeted by more than 20%. Hong Kong stocks also collectively fell, with the Hang Seng Index dropping below 20,000 points.

Ms. Yu stated, “The stock market is still experiencing ups and downs. Whenever the government sees a decline, they come out to make announcements and release new regulations, continuing to deceive the public. Now, older individuals are more experienced and less likely to easily invest their money. However, the younger generation doesn’t understand. When the government calls, they will still pour money into the market.

“However, many securities firms and corporate executives of listed companies are clear about the actual situation in China. So, these younger people, even borrowing money to raise loans to boost the stock market. Those executives and securities firms took advantage, sold off their stocks, cashed out, and as a result, the stock market fell again.”

As millions of new investors rushed into the market, 172 listed companies announced reduction plans from September 24 to October 11, withdrawing large sums of funds from the stock market.

Former chief economist of a brokerage firm, Li Daxiao, revealed to Southern Weekend that China’s A-shares were built up by individual investors, numbering 210 million.

Ms. Yu said, “In recent days, A-shares typically rise in the morning and fall in the afternoon; it’s all to extract money from the public. The Chinese stock market doesn’t follow market rules, economic laws; it knows that the middle class has deposits on hand, so it wants to extract their money. Because now the central government is running out of money, local governments don’t have money either. The stock market has been in a slump for a long time, and the government repeatedly stimulates public consumption to promote internal economic circulation, but private consumption keeps downgrading.”

Economist David Wang, currently based in the United States, also informed Epoch Times that the volatile rise and fall of the stock market is the CCP’s way to raise funds for listed companies.

He said, “Among the various policies and measures issued by the central bank to rescue the market, one of them is to help listed companies raise funds, allowing them to mortgage their equity to banks or the central bank for loans. They then use the borrowed funds to repurchase their own stocks in the market.

Wang gave an example, “Just like developers, they can mortgage unsellable houses to banks, then borrow from the bank to repurchase their unfinished housing projects.

“This policy is strange. After it was announced, we saw a sudden surge in stock prices across the market because the central bank was manipulating it. All listed companies kept buying back their stocks, raising prices, attracting individual investors to enter, then, after a seven-day holiday, letting them gather funds to take over.”

Wang pointed out, “This current round of stock market fluctuations hasn’t completed yet because now there is a huge fiscal deficit at the local government level. Only the public entering the market is not sufficient. It also needs to attract more investment funds, including some foreign investments, funds from banks, etc., so this game is far from over.”

He said, “As for the ultimate result, there is no doubt that retail investors will lose money. The manipulators of the stock market make money; this is an age-old rule.”

Recently, Nomura Securities also issued a warning that the largest rebound in the Chinese stock market in 16 years could turn into a collapse because the foundation of the Chinese economy is much weaker than before the pandemic.

On October 3, in a report to clients, Nomura Securities wrote that in the most pessimistic scenario, a frenzy in the Chinese stock market followed by a collapse is imminent, similar to what happened in 2015.

The stock market crash in 2015 remains fresh in the memory of veteran investors.

From November 2014 to June 2015, without any significant changes in the Chinese economy, the A-share market artificially created a wave of the “bull market,” but starting from June 15, there were 21 trading days where stock prices plummeted or crashed, with 17 instances of hitting daily limits. This stock market crash not only pushed A-shares into a bear market that lasted for 9 years but also swallowed the wealth of countless Chinese families.