China's stock market tumbled on Thursday as investors were spooked by a possible interest rate hike at the weekend, and the increasingly unstable debt woes in the United States.
The landmark Shanghai composite stock index dived 46.94 points, or 1.71 percent, on a turnover volume of 95.1 billion yuan, to close at 2703.35. The Shenzhen index lost 247.90 points, or 2.11 percent.
Investors sold off their holdings as they were unnerved by the spreading speculation that the central bank, the People's Bank of China, will raise interest rates again on Friday at the earliest.
Most analysts have predicted that inflation for May kept hovering at between 5.3 to 5.5 percent, as compared to Beijing's set annual target of 4 percent, which provides ground for the central bank to continue to tighten its monetary policy.
Stocks of financials, properties and resources led the decline, as interest rate hikes are believed to hurt the bottom line of banks, real estate developers and Chinese manufacturers' appetite for resources including oil, coal, iron and steel and other metals.
The heavyweight China Merchants Bank Co. dropped 27 cents, or 2.04 percent to close at 12.96 yuan, the lowest closing in more than two months. China's largest property developer, Vanke Co, declined 20 cents, or 2.47 percent to close at 7.90 yuan.
In addition to worries about interest rate hikes, investors also were concerned about the tumultuous debt thorn in the United States, because Western media reports said that mainstream Republican lawmakers at Capitol Hill were flirting with a brief default of U.S. government debt to coerce White House to agree on more concessions to slash America's fiscal spending.
If the United States cannot make interest payments on its national debt, experts have warned of "catastrophic" consequences that could immediately roil global financial market, and sink the anemic U.S. economy back to a depression.
Li Daokui, a top Chinese economist and an advisor to the central bank, warned on Thursday at a Beijing forum that U.S. lawmakers have better not "play with fire".
"I think there is a risk that the U.S. debt default may happen," Li told reporters. "The result will be very serious and I really hope that they would stop playing with fire."
U.S. Congress has balked at increasing a statutory limit on government spending as lawmakers argue over how to curb a deficit which is projected to reach $1.4 trillion this fiscal year. The U.S. Treasury Department has said it will run out of borrowing room by August 2.
By People's Daily Online
Weekly review
The landmark Shanghai composite stock index dived 46.94 points, or 1.71 percent, on a turnover volume of 95.1 billion yuan, to close at 2703.35. The Shenzhen index lost 247.90 points, or 2.11 percent.
Investors sold off their holdings as they were unnerved by the spreading speculation that the central bank, the People's Bank of China, will raise interest rates again on Friday at the earliest.
Most analysts have predicted that inflation for May kept hovering at between 5.3 to 5.5 percent, as compared to Beijing's set annual target of 4 percent, which provides ground for the central bank to continue to tighten its monetary policy.
Stocks of financials, properties and resources led the decline, as interest rate hikes are believed to hurt the bottom line of banks, real estate developers and Chinese manufacturers' appetite for resources including oil, coal, iron and steel and other metals.
The heavyweight China Merchants Bank Co. dropped 27 cents, or 2.04 percent to close at 12.96 yuan, the lowest closing in more than two months. China's largest property developer, Vanke Co, declined 20 cents, or 2.47 percent to close at 7.90 yuan.
In addition to worries about interest rate hikes, investors also were concerned about the tumultuous debt thorn in the United States, because Western media reports said that mainstream Republican lawmakers at Capitol Hill were flirting with a brief default of U.S. government debt to coerce White House to agree on more concessions to slash America's fiscal spending.
If the United States cannot make interest payments on its national debt, experts have warned of "catastrophic" consequences that could immediately roil global financial market, and sink the anemic U.S. economy back to a depression.
Li Daokui, a top Chinese economist and an advisor to the central bank, warned on Thursday at a Beijing forum that U.S. lawmakers have better not "play with fire".
"I think there is a risk that the U.S. debt default may happen," Li told reporters. "The result will be very serious and I really hope that they would stop playing with fire."
U.S. Congress has balked at increasing a statutory limit on government spending as lawmakers argue over how to curb a deficit which is projected to reach $1.4 trillion this fiscal year. The U.S. Treasury Department has said it will run out of borrowing room by August 2.
By People's Daily Online
Weekly review
