Quantitative easing (QE) is utilized by U.S. and European banks to manipulate asset prices and provide stimulus to asset-dependent economies. China’s market manipulation is no less blatant, but is distinct in its aim to promote new markets.

Despite the recent unprecedented slump in the stock market, the Chinese government’s strategy in developing the equity market has not changed, and Beijing will continue to foster a healthy development of the stock market through market-oriented reform policies. That means the surging trend in the Chinese stock market will continue in the second half of the year.

The government’s aggressive response in stabilizing “Uncle Xi’s bull market,” has highlighted the political nature and disconnect between the stock market and overall economic health. The government must decide whether to continue its efforts to open the capital account and liberalize the exchange rate.