The paradox of China's stock market (2)

STOCKS AND GDP TELL DIFFERENT STORIES

The Shanghai Composite Index opened at a nearly four-year low despite China's fast-growing economy, surging consumer affluence and rising global clout that has been hard for investors to ignore recently.

The Shanghai index has tumbled 43 percent over the past three years and is down 64 percent from its peak in early 2008, according to media reports.

Although China's economy grew by 7.4 percent year on year in the third quarter of 2012, slowing for the seventh consecutive quarter and down from 7.6 percent in the second quarter and 8.1 percent in the first, it is still leading the world's economies in terms of gross domestic product (GDP) growth.

The growth rate of China, the world's second-largest economy, is expanding by about four times that of the United States.

China set its annual growth target at 7.5 percent this year. The National Development and Reform Commission, China's top economic planner, said on the sidelines of the national congress held earlier this month that the country is on track to achieve this target.

The HSBC said earlier this month that its Flash China Manufacturing Purchasing Managers' Index (PMI) bounced back to expansionary territory for the first time in 13 months to stand at 50.4 in November, indicating that the Chinese economy is gaining momentum.

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