Four years after China's growth helped lead the global economy out of a recession and won the admiration of luminaries from billionaire George Soros to Nobel laureate Joseph Stiglitz, the nation's stock market has lost more money for investors than any other in the world.
The Shanghai Composite Index, which doubled in the 10 months to August 2009 as the government poured US$652 billion of stimulus into building roads, railways and housing, has tumbled 43 per cent from its high, destroying US$748 billion in market value.
Only Greece's ASE Index has fallen more in percentage terms. The Standard & Poor's 500 Index, the benchmark gauge of American equity, erased all of the losses from the worst recession since the Depression and has gained 68 per cent since the China peak, reaching a record this month.
China looked unbeatable in 2009, surpassing Germany as the world's third-largest economy and growing 6 per cent in the first quarter while the US shrank 4 per cent.
Templeton Emerging Markets Group executive chairman Mark Mobius said in July 2009 that China's stock market could be larger than its US counterpart in three years.
Now, China is poised for the weakest expansion since 1990 as the government orders more than 1,400 companies to close factories.
"The Beijing consensus as endorsed by some Western observers as an alternative to the market economy is indeed a sham," said Hao Hong, the Hong Kong-based head of China research at Bank of Communications, whose forecasts for stock losses have proved prescient. "Now we are all paying for it."
Chinese companies dropped out of the ranks of the world's 10 biggest by market value for the first time since 2006 last month. They claimed five of the top spots when Soros, the former hedge-fund manager, and Stiglitz, who won the Nobel prize for economics in 2001, endorsed China's economic policies in 2009.
For all of its destruction of wealth, the China bear market is dwarfed by the Great Crash, when the Dow Jones Industrial Average declined 89 per cent from a peak in 1929 to a low point in 1932. More recently, Japan's stock market as reflected in the Nikkei-225 Index lost 63 per cent of its value between 2000 and 2003.
The Shanghai measure is valued at 10.7 times reported earnings, down from 29 times at the peak in 2009. The index, which traded at a 59 per cent premium versus the S&P 500 four years ago, is now 34 per cent cheaper.
"Sentiment from China can go from one extreme to the other," said Gigi Chan, a Singapore-based money manager at Threadneedle Asset Management.
"Investors were very excited, extrapolating the high growth rates quite far out into the future. It's turned out not to be the case."