The Research On The China's Stock Market Bubble

With the rapid development of the finance market, especially the capital market, there appeared quite a lot of bubbles in the economic system of China. If the expanding bubbles cannot be effectively eliminated in time, the macro-finance will be under more risks. With the expansion of the current stock market and the more and more important role it plays in the economic system, the problem arises how to make the stock market develop healthily and steadily and to avoid the risk of the stock market bubble. It is necessary to study the situation of the stock market bubble and to seek the way to avoid them by analyzing the causing reasons, to attain the final purpose to control the bubble and to keep away from the irrational bubble.In this article we not only introduce the conception and the mechanism of the bubbles but also measure the degree of the Chinese stock market bubble between 1993 and 2006 with the dividends discounting model,Tobin Q ratio and relative growing method which come to the same result that contrasting with the historical experience we can see that the irrational bubble is coming into being and claims that investors should take care and avoid risks and supervisors should carry out effective supervision.