HONG KONG (MarketWatch) — China’s stock markets are climbing to feverish heights as a record number of ordinary Chinese, including teenagers, flood into equities.

But in the eyes of many, the share-buying frenzy and wild bull market are all due to one thing: The Chinese government wants it that way.

Like the “Greenspan put” of the dot-com era, in which U.S. investors believed then Federal Reserve chairman Alan Greenspan was backstopping the market, Shanghai now seems to be surging on the belief in a “Beijing put.”

Although emerging markets have been doing quite well recently — the MSCI EM Index 891800, has risen by more than 10% so far this year — the surge in China markets is particularly prominent.

By the close of Thursday trade, the benchmark Shanghai Composite Index SHCOMP, +2.06% was up 30% year-to-date, and it has more than doubled in just the past 10 months.

The boom has also spilled over to the nearby Hong Kong equity market, where the city’s benchmark Hang Seng Index HSI, +0.47% has surged nearly 18% since the start of January, while the mainland-China-tracking Hang Seng China Enterprises Index 160462, +0.72% has climbed by 22% over the same period.

‘Great army’ of new stock investors

Emboldened by the astounding advance, an increasing number of ordinary Chinese have joined what the state-run China News Service has called the “great army of stock investors,” lining up outside of brokerage firms to open new trading accounts.

The sharp increase in new investors and market volume has even caused system breakdowns for China Securities Depository and Clearing Corp. (CSDC) — the national clearing house — as well as individual securities firms.

Statistics from CSDC show that last week the number of new stock-trading accounts opened hit a fresh all-time high of 1.68 million, beating the previous 1.67 million recorded for the week of March 27. In only the past month, mainland Chinese investors opened more than 6 million such accounts, according to the data.

The CSDC said that this “steep rise” in new stock-account applications left it unable for a while on Tuesday to handle the barrage of requests, while Haitong Securities 6837, +2.83% 600837, +3.32% , the second-largest securities firm in the country, also encountered “a system breakdown” the same day, according to a report in the Beijing Youth Daily.

At the same time, the explosive growth in demand has caused brokerages to boost their margin lending, with Haitong Securities and fellow financial heavyweight China Merchants Securities 600999, +7.80% announcing earlier this week that they would increase their margin quotas for investors.

State-driven rally

According to analysts, this dramatic performance for China’s stock markets is due in large part to the belief that the government is supporting the gains.

In a note to clients Wednesday, Capital Economics markets economist Kevin Ferriter said the most important factor behind the China bull market was the impression policy makers have given to investors that “they will aim to keep equity prices high.”

A note the following day from Ferriter’s CapEcon colleague Mark Williams added that the steep gains were a result of sentiment rather than any improvement in underlying economic conditions.

The view from within China is similar, with analysts from Guangzhou Securities saying in a report earlier this week that investors are currently “strategically going long” in local equities because “state will” has strongly intervened in the situation.

A recent editorial from the popular news-portal site of Sina Corp. SINA, -0.49% says this apparent government backing for higher share prices is all about the Chinese leadership’s hope to create a thriving stock market that will provide sufficient funding for the nation’s emerging industries.

In this way, Sina said, China can better advance its plans to transition the economy away from old models, including the reform of state-owned enterprises.

“So far, most investors have already understood that such are the wishes of the leadership and flocked into the markets,” Sina said.

But wait a second...

Yet if state will and the Beijing put have done much of the lifting in the China rally, some voices from within the government may now be getting a little concerned.

The possibility of a bursting bubble is all the more worrying to policy makers since roughly 90% of Chinese stock-trading volume comes from retail investors, according to government data released late last month.

In recent days, the same regulators and state media who have repeatedly talked up the stock market through public comments and special reports are now urging caution.

China Securities Regulatory Commission Chairman Xiao Gang warned Thursday that new stock investors must “act according to their ability” and remain “calm and rational.” Xiao advised such market participants not to be driven by a fear of “missing out” on the rally.

In the same vein, the state-run Xinhua Daily Telegraph published a commentary earlier this week warning of the potential for a dangerous stock bubble.

“From the perspective of many Chinese people, they are in a situation in current bull market where it’s like picking up money on the ground, and so they fan out into the markets,” helping to “create and drive the market fever,” the commentary said.

However, since the Chinese people are “so keen to follow the trend,” they must be “guided” and educated repeatedly about market risks, it said. “Otherwise, when all the citizens are speculating on stocks, it only exacerbates the problem of stock bubbles and leads to an eventual systematic risk.”