Think Greece's Economy is the One in Trouble?

China’s tumbling stock markets plunged even further today, intensifying fears the country was tail-spinning towards the biggest financial disaster since the 1929 Wall Street crash.

Almost $3trillion (£2trn) – more than the entire economic output of Brazil – has been wiped out since markets went into reverse just a few weeks ago, posing a bigger headache for many global investors than even the Greek debt crisis.

China’s government, regulators and financial institutions are now waging a concerted campaign to prop up the nation’s stock markets – a move that failed spectacularly in the 1929 crash that triggered the Great Depression.

The plunge in its previously booming stock markets, which had more than doubled in the year to mid-June, is a major problem for President Xi Jinping and China’s top leaders, who are already grappling with slowing growth in the world’s second largest economy and another bursting bubble. Swords Into Plowshares... Paul, Ron Best Price: $4.00 Buy New $15.99 (as of 11:36 UTC - Details)

‘The parallels with 1929 are, on the face of it, uncanny,’ wrote Jeremy Warner, economics commentator and assistant editor of The Daily Telegraph.

‘After more than a decade of frantic growth, extraordinary wealth creation and excess, both economies – America in 1929 and China today – are at roughly similar stages of economic development.

‘Indeed, China’s credit boom dwarfs that of even the “roaring Twenties”.’

Beijing intensified efforts at the weekend to pull China’s stock markets out of a nose-dive, with top brokerages pledging to buy massive amounts of shares and a report that the government has set up a market stabilisation fund.

Beijing has also suspended new share offers in an attempt to take pressure off the market after a 30 per cent plunge in three weeks.

The reported suspension of initial public offers (IPOs) came a few hours after extraordinary announcements by major brokers and fund managers, which collectively pledged to invest at least $19billion of their own money into stocks.

Mr Warner said: ‘The firebreaks that China put in place over the weekend to mitigate the panic are, in practice, not much different from those applied during the Great Crash of 1929, only this time it’s public rather than private money that promises to quell the fire. 

‘This time around, they’ve thrown the kitchen sink at the problem, but so far it has produced only a mild, and wholly unconvincing, rebound. The fire still smoulders, threatening to break out anew.’

Chinese stocks plunged today after the country’s securities regulator warned investors were in the grip of ‘panic sentiment’ and the market showed signs of freezing up as firms scrambled to escape the rout by having their shares suspended.

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