China’s $1.2 Trillion Stock Market Rally Has Beijing Nervous

China’s stock market has been on a $1.2 trillion tear since August, and regulators are starting to sweat. Behind closed doors, officials are weighing ways to cool the frenzy — from easing short-selling curbs to cracking down on speculative trading. Memories of the epic 2015 boom-and-bust still loom large, and policymakers are wary of another retail-driven bloodbath that could crush consumer sentiment just as Beijing is trying to shore it up.

The rally has lifted the Shanghai Composite to a decade high and pushed the CSI 300 up more than 20% from its lows. But with trading volumes and margin transactions hitting near-records, and retail investors flooding into new accounts at a breakneck pace, the mood is bordering on frothy. Regulators have already leaned on banks and brokerages to rein in reckless credit-fueled trades, nudged social platforms to tone down the “get-rich-quick” hype, and even halted or capped mutual fund products to head off wild swings.