So why are people then trading stocks in China or India or wherever if they don't trust the system? They wouldn't be able to become the largest stock markets if nobody would trade there and there would be nothing to be scared by.
> So why are people then trading stocks in China or India or
> wherever if they don't trust the system?
If the perception is there that people are trading in these markets, people will trade in these markets. But without fundamentals, the whole thing can quickly suffer from a collapse in confidence, followed by a "run."
It's no different than buying Bitcoins. Why speculate in bitcoins? Because other people are speculating in bitcoins.
Even if they retain control by selling to a trusted partner, the asset shift is painful. If you can imagine foxconn getting into that trouble, it's very easy to imagine them not being able to manufacture IPhones or Galaxys for a few months while they negotiate contracts with the new asset owners. Any idea what that would do to Apple stock? And, you know, your 401k?
This is an extreme example, but captures the spirit. when suppliers go out of business, or even run into trouble, all the companies that depend on them slow down, have to renegotiate new contracts, possibly miss deadlines. It can be ugly.
See http://www.nytimes.com/2015/11/29/business/international/chi... and its discussion https://news.ycombinator.com/item?id=10645768
Non-rich Chinese people are doing that because the government has been pushing it pretty hard (think the way state lotteries are pushed in the US, or fantasy sports, with pretty much the same returns, really).
Oddly enough, said non-rich Chinese people are also the ones China is trying to protect with its market stabilization efforts, or so it claims. I'm really not quite sure what they _think_ they're doing there.
Apart from that, it's pretty much all people looking to make a quick speculative yuan.