From Nasdaq:

China’s stock market has seen a recent surge after some pledges from Beijing but faces economic challenges. These include slow growth and a high level of debt. Further compounding the issue is stagnant productivity growth and Xi Jinping’s efforts to increase his control over the economy. The domestic consumer demand has also slowed down, which doesn’t bode well for future growth.

According to analyst Nathan Levine, the struggling economy will impact the rate at which China’s GDP grows. For example, consumers have high rates of savings but are not putting that money back into the economy, thereby impacting future growth.

The resurgence of Marxist-Leninist ideology and Xi Jinping’s increasing control over the economy could drive away foreign investors. The current market interventions seem to be temporary, which has led to reduced trust from investors.

The mainland market indexes were up on Wednesday, giving a temporary respite. However, the stocks of some major holdings such as Tencent Holdings and Alibaba Group Holding were down as earnings failed to meet market expectations.



Read more: China Market Woes Far From Over, Analyst Says: Talk Is Cheap, But Urgent Action Needed