China stock market drops 6.54%

The Shanghai market has collapsed in recent months with countless falls. Lately the Chinese government has started to focus on inflation, a world problem. Previous rumors of government intervention helped boost the market yesterday but today it lost its previous gains and then some. If the Chinese government intervenes, it can expect even higher inflation though if it does nothing, the Shanghai market will continue to drop, losing even more money for speculators and investors who previous made money on almost everything.

All of this is dangerous territory for the Chinese government. Inflation drives up the cost of everything and China doesn't want to lose business to other developing countries. Foreign investment and becoming the world's factory is what made China the economic giant that it is today. Inflation also has a negative impact on the poor who continue to struggle in China. On the other hand, a tumbling stock market where investors are losing money causes problems with speculators losing their life savings. These are definitely tricky times for the Beijing government.