Yes, and even if the are actually fully informed and very skilled, there are severe limitations on what "management" of press and psychology can do.
In an economy, an excess must eventually be corrected. The problems are that it's a dynamic super-multi-variable system and tends to overshoot in both directions. Ideally, an excess would self-correct soon and gently, but many information loops have too long a lag. Hence, the warning that "markets can remain irrational longer than you can remain solvent".
In cases where the bubble is moderate, 'management' may well keep the psycology from falling too far and overcorrecting, buying time, so that the situation can correct without a crash.
However, it also continues the excess for far longer, and often allowing a far greater degree of excess. So, if the excess breaks through the management, the crash will be _much_ steeper and deeper, overshooting far on the downside.
I'm not sure if the PRC doesn't understand this risk, or if it does and is just in too deep to do anything else.
Either way, it is a seriously growing risk for them and globally.
Of course, but the Chinese needed to do that a decade ago -- it is way too late for that now...
Usually the central banks serve that function by raising interest rates in better times as the economy heats up. China's? Not so much. Seems they might need to learn this lesson the hard way.
In an economy, an excess must eventually be corrected. The problems are that it's a dynamic super-multi-variable system and tends to overshoot in both directions. Ideally, an excess would self-correct soon and gently, but many information loops have too long a lag. Hence, the warning that "markets can remain irrational longer than you can remain solvent".
In cases where the bubble is moderate, 'management' may well keep the psycology from falling too far and overcorrecting, buying time, so that the situation can correct without a crash.
However, it also continues the excess for far longer, and often allowing a far greater degree of excess. So, if the excess breaks through the management, the crash will be _much_ steeper and deeper, overshooting far on the downside.
I'm not sure if the PRC doesn't understand this risk, or if it does and is just in too deep to do anything else.
Either way, it is a seriously growing risk for them and globally.