China's troubled property market continues to get a lot of the headlines but China's stock market is also in terrible shape right now. The total losses since 2021 are roughly $7 trillion dollars.

While U.S. stocks have been soaring, Chinese shares have been on a seemingly interminable downward slide.

China's benchmark CSI 300 index is down by nearly 20% over the past 12 months and is hovering near a five-year low. The Hong Kong stock exchange's Hang Seng China Enterprises Index has dropped more than 4% since the start of the year and by 25% since this time last year.

Chinese stocks have fallen by around half since they peaked in early 2021, and they are hovering around five-year lows.

Forbes offers some perspective on the scale of the losses.

Economists are struggling to put China’s epic $7 trillion stock crash in perspective. The best size and scope may be that, since 2021, the market has lost the combined gross domestic product of Japan and France...

In recent week, the state security ministry has reportedly made clear Beijing is on the lookout for those disseminating negative views on China’s economic and market prospects. This chilling warning not to “denigrate China’s economy” via “false narratives” is Mao Zedong, not Adam Smith. And it raises troubling questions as China’s influence soars.

Jeremy Mark at the Atlantic Council points out that a lot of that money was foreign investment from people who were expecting China's economy to boom once the COVID-zero restrictions ended. He says a lot of those investors won't be back, partly because Xi Jinping has been sounding a lot more like a communist ideologue lately.

All of this adds up to ever-deepening disenchantment for foreign institutional investors, many of whom made big bets on China a year ago in expectation of a post-COVID economic boom. As last year’s rally evaporated, an estimated 90 percent of those once-bullish foreign investors headed for the exits; some of them were also nursing their wounds from the property companies’ defaults on high-yielding, dollar-denominated bonds. The reversal of capital flows was amplified by foreign manufacturers moving factories away from China, producing an unprecedented decline in foreign direct investment last year...

In Xi Jinping’s China there is always a need to keep a weather eye on the political winds. Even if the economy and property market bottom out in 2024, there are worrying signals about the government’s intentions for stock investors. Over the past few months, there have been various pronouncements directed at financial markets that suggest less tolerance for business as usual. For example, at a Chinese Communist Party Central Committee “study session” last month, Xi called for “the combination of the rule of law and the rule of virtue to cultivate a financial culture with Chinese characteristics” that would avoid “a single-minded focus on profit.”

It is worth recalling that the first shot in the campaign to rein in online companies was fired at the stock market in 2020, when regulators sank Alibaba Group’s plans to launch an IPO for its Ant Financial subsidiary after Alibaba founder Jack Ma publicly criticized regulators. What followed was a campaign under the banner of Xi’s 2021 call for “common prosperity”—a slogan associated with wealth redistribution that ultimately was directed at various unwelcome capitalist practices. The campaign was muted after it was seen to be undermining business confidence, but the latest broadsides from Beijing may prove unsettling to the markets.

The most worrisome aspect of the Chinese market right now may be the attempts by government censors to control the bad news.

China’s top intelligence agency is saying the quiet part out loud as it prioritizes “strengthening economic propaganda and public opinion guidance.” The truly disturbing question, though, is what’s written between the lines in bold font...

If you’re an economist convinced China’s economy is in trouble, do you dare put it in a report or a speech? If you think a mainland company is cooking the books, how do you warn investors without risking a visit from the authorities? Or if a strategist senses a certain mainland property developer might default soon, do you flag those concerns publicly?..

If you’re an academic in Hong Kong studying the effects of record mainland youth unemployment—on which China has stopped releasing data—do you bury the research? If you’re a non-government organization that would prefer not to be banned in China researching the environmental damage from “Belt and Road projects,” what do you do?...

These aren’t the actions of a strong and confident government. They’re the actions of officials who know their capital markets aren’t ready for global prime time.

State media reported that China replaced its securities regulator this week. Why? No one can say. Meanwhile, the feeling of malaise within China is leaking out in unexpected places, including a US Embassy post about giraffes:

The post by the U.S. Embassy in Beijing was about protecting wild giraffes in Africa. But social media users in China wanted to talk about something else: the state of the Chinese economy, especially its faltering stock markets.

Tens of thousands of users on Weibo, a popular Chinese social media platform, flocked to the post on the Beijing embassy’s official account over the weekend to express their anger and frustration as Chinese stock markets hit five-year lows.

“Who can save me? I went jobless for a long time and now I am in debt,” read one comment on the Friday post, which by Tuesday had been liked more than 751,000 times and received 171,000 comments...

Some users said the U.S. Embassy’s Weibo account had become a “Wailing Wall” for Chinese people’s economic concerns, referring to the site for Jewish pilgrimage and prayer in Jerusalem. 

China will be able to stabilize this eventually but the general consensus is that the good old days of seemingly endless growth and foreign investment may be over for the foreseeable future, at least it will be for investors who don't want to lose their shirt in the next wave of Xi Jinping's communist fervor.