China’s key stock indicator, the Shanghai Composite Index, fell 3.5% today (Jan. 15) to its lowest level since December 2014.

The Shanghai index has tumbled 18% in 2016, and more than 20% from its late December high. That puts it, for the third time in less than a year, in a fresh bear market.

A bear market is loosely defined as a 20% drop from a recent peak. The market fell by more than 20% from June 12 to July 1 for its first bear market, and then again from Aug. 17 to Aug. 25 for its second.

Measuring bear markets is an inexact science. You have to consider the stabilization of Chinese stocks from early July to mid-August as the end of last year’s first bear market to get three distinct bouts of bearishness in recent history. (Some may argue that the mid-June to mid-August period represents a single bear market.)

More generally though, and, more importantly for China, a bear market is defined as overwhelmingly negative sentiment in the market. There’s been plenty of that.

For the week, the Shanghai index was down 9%. And the CSI 300—a collection of blue-chip companies listed in Shanghai and Shenzhen—fell 3.2% on today and 7.2% for the week.

This year’s selloff began in the first week of trading, spurred by investors’ concerns that government moves to prop up the market could end. It was then exacerbated by a poorly conceived and soon scrapped circuit breaker mechanism.

This week got off to a bad start when the CSI 300 and Shanghai Composite each fell more than 5% on Monday. Beijing soon demonstrated more heavy-handedness by repeatedly intervening in currency markets to try to prop up the yuan, which short sellers have been circling as fears about the real strength of the Chinese economy increase.

The Shanghai Composite has fallen 43.9% from its high last June, and is down 51% from the high on Oct. 12, 2007.



While China’s stock markets are mostly a domestic affair, and involve only a fraction of China’s citizens, the fallout from their decline could be felt globally in areas like real estate and luxury spending. Their decline this year has already had an impact on global stock markets, where investors nervous about the overall state of China’s economy have been selling stocks.