Kevin Rudd on CNBC: Don't Confuse the Chinese Stock Market with Overall Economy
Appearing on CNBC’s “Squawk Box” this morning to discuss China’s stock market turmoil, Kevin Rudd, President of the Asia Society Policy Institute, cautioned “the stock market plays a relatively small role in the overall context of Chinese financial markets in general and the economy more broadly.”
“The role of the stock market there cannot be faintly equated with the significance of the New York Stock Exchange in the overall robustness of the U.S. economy,” he said.
Asked for his take on China’s interventions aimed at calming investors, Rudd agreed they are “significant.” But such interventions are not without precedent, he pointed out, describing similar moves in the U.S. in the 1980s and in Japan and Hong Kong in the 1990s.
Rudd added that the stock market’s recent period of volatility represents a learning moment for Chinese regulators.
“[Chinese] stock markets are not mature, financial markets are not mature,” Rudd said. “I think the regulators are having, in many cases, their first burst of reality in how do you deal with this sort of volatility.”
“This is an economy in transition. Thirty-five years ago this was a socialist economy, state-owned in its entirety. Thirty-five years later, it’s a mixed economy, on a road to transition,” he said.