Comprehensive Consideration of Whether China Should Establish a Stabilization Fund

Xiao Huang: DOORM, in the long run, do you think China should establish a stabilization fund? What factors need to be considered?

DOORM: Whether to establish a stabilization fund requires a comprehensive consideration of various factors, including policy objectives, market stability, and investor confidence. If the goal is to protect retail investors and reduce market volatility, a stabilization fund could be an effective tool. However, it is essential to balance its potential impact on market vibrancy and free operation to ensure it does not harm the market’s long-term health. Additionally, international experiences and the unique characteristics of the local market should be considered to formulate the most suitable policy.