Chinese stocks under pressure as investors lose confidence in the economy

According to Bloomberg estimates, the recent sell-off in Chinese and Hong Kong equities has wiped out almost $5 trillion in value, since the peak in 2021. According to Chinese state media, Wu Qing, a former chairman of the Shanghai Stock Exchange, will replace Yi Huiman as Chairman and Communist Party chief of the China Securities Regulatory Commission.
Anthony Sassine, Senior Investment Strategist at KraneShares, and Eswar Prasad, Senior Professor of Trade Policy at Cornell University, joins Yahoo Finance to discuss the state of China's economy and what the Chinese government will need to do to alleviate their current situation.
Sassine starts off by explaining current issues with the Chinese economy: "The policy has been supportive for the economy, especially from the fiscal side over the past two years. We saw that from infrastructure perspective and also manufacturing. And that helped a lot keeping the growth at 5%. But that hasn't been effective in actually bringing consumers back, right? So consumer sentiment continued to be depressed in China. Especially after two years of Covid and regulations, which show some of the internet companies kind of, being under the microscope, and not hiring as much as they used to. The consumer is still not consuming as they should."

Prasad explains what it will take to pick things up: "Right now, we are seeing deflation becoming entrenched. We see that the stock market is unraveling. The property market is not doing terribly well. Growth is slow, employment is weak. The biggest problem, though, is the lack of private sector confidence. Households are very reluctant to consume. Private businesses are very reluctant to invest. That's going through a combination of things to turn matters around. It's going to require some macroeconomic stimulus, especially fiscal stimulus that more directly supports consumers. It's also going to require some measures to restore confidence in the private sector. "
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