China’s stock market collapse raises doubts about economy’s recovery

China’s $6 trillion stock market collapse reveals a painful truth for President Xi Jinping’s government: that people are hopelessly pessimistic about the outlook for the world’s second-largest economy, and their pessimism is becoming increasingly difficult to ignore.

A sell-off in China’s benchmark CSI 300 index this month sent it down a brutal 40% over the past three years, exacerbating suffering in a market dominated by small investors.

The government rescue package under consideration, backed by about 2 trillion yuan ($280 billion), which was first reported by Bloomberg, and the sudden reduction in the banks’ reserve ratio, show that the authorities are growing concerned.