The PRC’s Shanghai Composite Index, which is an index of the stocks that trade on that country’s major stock exchange, the Shanghai Stock Exchange, has fallen by some 28% in the last week. This is the second time since 2007 that this index has fallen this far (in 2007 it dropped by roughly 2/3 over the course of 13 months beginning in October 2007). In response, the PRC has decided to close the market to IPOs until the central planners in Beijing decide conditions are suitable for IPOs.

This central planning foolishness got me wondering. How big a deal is the Shanghai Stock Exchange for the PRC’s economy?

The total value of the PRC’s stock market was around $4.2 trillion in 2014, per Bloomberg Business. The PRC’s Purchasing Power Parity GDP for 2014 was around $19 trillion. Thus, the value traded in its markets was roughly 22% of GDP.

In contrast, the dollar volume on the New York Stock Exchange last Thursday (2 Jul) was some $63.5 million. Expanding that (very naively) to a trading year of 220 days during which stocks are traded out of a 365-day year (weekends and holidays, after all), the annual dollar volume for the NYSE runs to a skosh under $14 trillion. The US PPP GDP for 2014 was $17.7 trillion. The value of the NYSE’s stock trading was a bit under 80% of our GDP.

It’s certainly true that 22% of GDP or the raw value of $4.2 trillion are hefty numbers. But at only 22%, the central planners, in addition to chasing chimeras with their assumption they actually can control in any significant degree any economy, are chasing a relatively minor chimera with their IPO moves. But, then, like central planners everywhere, they think they Know Better than mere investors. Even when the Know Betters are monstrously wrong.