Not too long ago a friend of mine gave me a book entitled Chinese Yuan Derivative Products by a Peter G. Zhang.

It disconcerted me. Here was a 390-page tome that talked the talk as if Shanghai were New York. It had chapters on yuan swaps, yuan non-deliverable forwards and options, yuan structured deposits and structured notes and yuan offshore products and offshore derivatives.

'Hang about here,' said I to myself. 'Have I got this all wrong? Is there really a sophisticated financial market in Shanghai after all and somehow I have been mistaken all these years in thinking that that this was still decades away and would first need a revolution in fundamental ideas?'

I didn't read this book, I must admit. Some books are meant for reading and some books are meant for impressing people and matching the colour of the carpet. This one was clearly of the second sort, so tedious that I couldn't keep my attention on it for longer than 10 seconds - a work of great authority, in other words.

But it did not take me long on Saturday, after I had read of the CSRC's do-not-sell instructions to fund managers, to conclude that it also had to be a piece of straight b******t, the equivalent of extolling the high performance flight characteristics of a wet brick.

How can anyone talk of yuan structured note products in a financial system to which one cannot even apply the word 'market'? If a government agency can tell sellers not to sell when they want to sell and can make it stick, then there is no market, let alone any hint of reality to fancy derivative instruments.

I would like someone from the CSRC to explain to me what a mutual fund manager is to do if told he may not sell while at the same time he has redemption demands from his clients. How does he tell them that he had his fingers crossed behind his back when he promised them that they would be able to get out of his fund as well as into it?

How does the CSRC think that people will be attracted to pooled investment funds in the future if they know that at just those times when they feel it most urgent to get out, they will not be allowed out? It's ludicrous that a regulatory agency should decide whether and how investors should be allowed to sell their holdings.

Let me amend that statement. It would be ludicrous in a market economy but the CSRC has just served us notice again that China does not have a market economy. The one it actually has is still run on administrative fiat from Beijing with only a show of market freedom.

For the education of the CSRC, however, I offer two charts that show how unpredictable markets can be and why people should not think themselves smarter than a market.

The short red line on the first chart represents the US dollar equivalent of the Shanghai Composite Index based to an index value of 100 for the end of January 2005. The longer blue line represents the equivalent performance of the Taiwan stock market shifted 17 years into the future so that its actual peak of January 1990 now shows up as October 2007, when the Shanghai market reached its peak.

If Taiwan in 1990 is any indication, share prices in China still have a very big bull market coming very soon.

Now turn to the second chart. Once again that red line represents Shanghai but the blue line now represents the equivalent peak of the Hong Kong market in February 1973 shifted forwards to October 2007.

If the Hong Kong experience is any guide, the Shanghai market still has a long way to fall and can't expect another bull market for another eight years.

Which is closer to truth? I can't tell and neither can the CSRC. Likewise, I don't try to tell the Shanghai market what it should do and neither should the CSRC. No-one should. We mere humans are never smarter than the market.