How do we smooth the transition toward a sustainable financial order? In my view, just as nobody should want a drug addict to die from going “cold turkey", we should take into account the challenges facing those who will be worst affected by a change in regulation – and offer demanding, but feasible transition schedules.
For many market participants, this was a clear indication of an exaggeration. Yet again, it became apparent that financial markets are not a one-way street – not even in China. Since the capital market in China is still comparatively heavily regulated in comparison with other large economies, the direct wealth effects of the slide in prices were limited for foreign investors.