Abstract

The rise of China and the five-fold increase in the expanse of its stock market over the previous decade has spurred a rising body of research in financial economics on the marketplace. The link between the development of the Chinese stock market and China’s economy has always been an eternal topic. The existing literature has rarely systematically analyzed whether the stock market development is a barometric measure of China's economy. To this end, this paper examines the role of using the Chinese stock market’s development as a barometer of China's economy by studying the relationship between stock price changes in the stock market and China's Industrial Development Index.

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