Why China Is Trying to Curb Short Selling of Stocks: QuickTake

As Chinese shares tumble, the country’s largest stockbroker, which is state-owned, is seeking to stem the slide by suspending short selling for some clients in mainland markets. The move follows a series of market interventions by the authorities — including state buying of bank shares — that failed to halt the decline. More than $6 trillion has been wiped off the market value of Chinese and Hong Kong stocks since a peak in 2021, with history showing that short-selling restrictions usually don’t provide a long-term boost.

1. What is short selling?

It’s a strategy that works when asset prices fall. ...