Dramatically Since China's Stock Market Crash In October .2007 Influence And Countermeasures

Since October 2007, China's stock market has fallen over 70 percent in 13 months. Due to the economic crisis caused by US sub-prime mortgage, the international economic situation is turning down and this has affected China's stock market as well. There are many reasons which account for the falling. This falling had and is having big impact to China's entity economy. This paper analyzes the reasons why China's stock market fell so much and its impact on entity economy; finally gets some enlightenment and some suggestions are given to advice.This paper first reviews some theories about the factors which affect stock market's rising or falling, which includes the relationship between economy and stock market, demand/supply, monetary policy's impact. Then the author introduces the development of China's stock market which includes two phases: development before 2005, falling and rising after 2005. This will help better understand the background of this falling. According to this, the author analyzes the reasons. It is summarized as following: financial crisis, equity division reform, shrinking monetary policy, new labor contract law's implementation. Finally discusses the impact caused by this falling which includes: difficulty to finance, fortune effect, public supervision and social instability. Suggestions and advice are given in the following field: changing monetary policy, real estate policy, RMB appreciation, new labor contract law and IPO.