Current volatility in the Chinese stock market may have come to many as a shock. The 35% price crash did not come after a period of stagnation, but rather on the back of one year of steep price increases of more than 100%. Former U.S. Federal Reserve Chair Alan Greenspan would have likely called it "irrational exuberance." It is a traumatic event for the Chinese economy, but rest assured that the rest of the world has seen a few of these, lived through and learned from them. China can do the same. After Hong Kong's 1973 market crash, the Hong Kong government strengthened the market surveillance and unified the four exchanges. After the U.S. stock market crashed in 1987, the Fed provided money to banks to lend to people, which probably stopped the panic and prevented more serious problems.
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