The Chinese miracle of the past few decades lifted more people out of poverty, and faster, than anywhere else in history. But even the spectacle of poor farmers graduating to Chevrolets could not compare to the thrill ride of China's stock markets in the past year, which left recent university graduates counting their weekly profits in the number of new Audis they could afford – and pinching themselves at their immense good fortune.
But when it all started to fall apart, China's fast-swelling new investor class blamed not misfortune or their own poor choices in share-picking. They instead faulted a government that had been the stock market's cheerleader-in-chief. It was Beijing's insistence that helped prod retirees and students alike to pour savings into stocks that then nosedived, taking with them lifetimes of accumulated wealth.
For China, then, the market crash has created not just spiralling fortunes but a crisis of trust. And as the rout deepened, people who are denied a democratic voice in their governance instead cast ballots with sell orders – making undeniably clear their dissatisfaction with the way markets, and by extension their country, has been run.
"This is a vote of no confidence by the punters," said Willy Lam, a China expert and senior fellow at the Jamestown Foundation. "This is the most serious crisis that the Xi Jinping administration has faced."
At its heart is rising doubt about the viability of the post-Tiananmen order, which has seen Beijing seek to propel economic reform under an unbending authoritarian regime. Plummeting share prices are a sign, Mr. Lam said, that Chinese people are saying no more.
"They have reached the limit," he said. "And the economy cannot move forward without commensurate at least institutional reforms, if not political reforms."
Aware of anger rising against it, Beijing this week mounted an unprecedented attempt to halt the market slide, barring executives from selling stock, allowing vast sections of the market to go dark to wait out the carnage and promising "unlimited liquidity" to bring the market back afloat.
Despite a slight recovery Thursday, investors largely ignored it, pulling stock values down 27 per cent in Shanghai and another 36 per cent in Shenzhen this week alone. In the past month, $3-trillion has vanished from China's markets.
If Beijing's interventions didn't save the market, they did reinforce discontent. "Investors have long felt little confidence in the government's ability to regulate the stock market," said Wang Fuzhong, a professor at China's Central University of Finance and Economics. The full-throated response in the past week suggested to many that something was seriously wrong with the system, he said, further "deepening investor distrust toward stock-market regulatory institutions. Their reputation was seriously harmed."
State media have sought to shift blame, suggesting responsibility for plummeting stocks lies with, among others, rumour mongers, overly excitable investors and foreign firms whose short-selling destabilized the market.
Prof. Wang sneers at that. "North Korea blames all of its disasters, natural and man-made, on the U.S. This is the same kind of thinking," he said.
China has acknowledged that the problem it faces goes beyond worries about a slowing economy. "Confidence has become the scarcest resource in the Chinese stock market," a commentary in the state-run People's Daily admitted this week.
But the government has sought to persuade its people to see Beijing as the solution rather than the problem. As the Communist mouthpiece Global Times said in an editorial this week: "All we need is confidence to overcome the hurdle, and only a cheerleading government can give us that."
Few, however, are willing to forget the role Beijing played in creating the crisis, by luring in new ranks of investors it urged to invest as their patriotic duty.
China's trading amateurs often had little idea what they were doing. One study found that among the most recent investors, roughly two-thirds were high-school dropouts, and fully 6 per cent were illiterate. They were beckoned into the market by a barrage of encouragement in state media and supported national policies that deliberately loosened the flow of money. It was a terrific success.
Retirees crowded brokerages that set up computers for walk-in trading, and soon Chinese traders – 90 million – outnumbered members of the Communist party. One study found those investors were the most active on Earth, flipping stocks at a frenzied pace, convinced they could not lose. Websites cropped up to lend money for stock buying, and past failures were forgotten – prominent economist Wu Jinglian warned in 2001 that Chinese markets are "worse than a casino." The 2009 crash was so deep that stocks had yet to recover their previous highs.
China was not alone in pushing its people to invest. Last year, Morgan Stanley chief analyst Jonathan Garner said the Shanghai composite index could reach as high as 16,785 points by the end of 2015 – nearly five times its current level – while Charles Li, chief executive of the Hong Kong exchange, two months ago promised the money would keep flowing. "The party's going to be here to stay," he said.
And some Chinese authorities did preach caution. In April, the spokesman for the China Securities Regulatory Commission warned that rocketing share prices were moving in the opposite direction from the economy, saying "it is advisable for investors to be cautious against risks."
But that message received far less attention than the calls to buy.
Still, not everyone is willing to blame China – in part because some see the stock crash as a positive development. "We consider this correction as a rite of passage for the young bull following some youthful recklessness to reach a state of more sensible maturity," said Wendy Liu, head of China equity research for Nomura, the global investment bank. "We see some good collective learning among the individual investors in China so that they curb excessive fear and greed."
The more critical question is what lesson China's leadership takes from the current mess. There is little doubt Beijing still has a deep interest in stoking stock markets. Roaring returns serve many goals for Beijing, helping to bail out its debt-ridden state-owned enterprises and manufacturing financial gains that can help fill a national social-security funding gap estimated at $2.6-trillion to $4-trillion.
But rekindling markets will mean finding a way to regain trust among China's investors and its population more broadly. Is Beijing willing to make changes – political and regulatory – that could underpin more trustworthy markets, and perhaps even a fairer society, in years to come? Or does it carry on as it has before, in hopes a new boom will soon erase memories of loss?
To Andrew Wood, an analyst with BMI Research, the answer is clear. The stock crisis has underscored the weaknesses in a system where the state's interests outweigh those of its people, and its investors. He is not optimistic, however, that Beijing will contemplate internal surgery. Its extraordinary political meddling in markets this week has "flown directly in the face of the government's declaration at the Third Plenary Session that it would allow market forces to play a more decisive role in the economy," he said.
That's not to say something different isn't needed. "China is currently witnessing a crisis of confidence," Mr. Wood said. "They have a lot of work to do to repair not only domestic trust in the system, but also to rebuild credibility with foreign investors."
With a report from Yu Mei