One curiously reassuring thing about China's stock bubble is that everyone agrees it is one; none of the 'new paradigm' talk heard on Wall Street to justify runaway valuations before last year's technology correction. 'There is clearly a bubble in Chinese equities,' SG Securities economist Jing Ping said, echoing other strategists and the implicit line taken by the mainland central government. Ms Jing also echoed the consensus line in that she did not expect the China bubble to explode soon. With savings growing, interest rates falling and mainlanders unable to invest abroad, investors would continue to try their luck in Chinese equities roulette. Yet in a report Ms Jing highlights several risks that could burst this bubble sooner than expected. As with most things in China, the first mover would ultimately be the government. Mainland authorities are currently taking an approach to the bubble that most describe as 'prudent'. They have made the approval process for company listings more market-oriented, against the sector quota system of the past that saw mostly loss-making, indebted state-owned enterprises getting the clearance. Regulators are cracking down on shoddy disclosure and poor financial management through measures that include the forced delisting of loss-makers. Regulators are also increasing share supply by making it possible to sell off state-owned stocks and encouraging Chinese companies listed abroad to raise funds on the domestic markets. 'But bubbles ultimately do burst,' SG said. Yet with shares at their present levels, the government must be very careful with its market signals to prevent a rush to the exits. 'On the back of listed companies' poor fundamentals, any expectation of serious efforts by the government to overcome market distortions could result in investors fleeing in panic,' SG said. Chinese regulators' words can be as market-moving in China as pronouncements by United States Federal Reserve chairman Alan Greenspan in the West. Plans for a crackdown on speculative trade have deflated the market in the past just as the present two-year stock run was inaugurated by a People's Daily article in June 1999 promoting the stock market's sustainable growth. Graphic: shan28gbz