Just as next year’s Beijing Olympics has been dubbed by many as the “Genocide Games”, this week’s 17th National Congress of the Communist Party should be dubbed the “Feel-Good Forum”.

Today’s prize goes to Shang Fulin, the chairman of the China Securities Regulatory Commission (CSRC), who told assembled delegates that the value of the mainland stock market reached US$3.37 trillion at the end of September, making it the world's fourth-largest by that measure.

Shang said the correlation of the market's ranking to China's world GDP ranking implied that the market is beginning to act as a reliable barometer of China's economy.

It sounds good, and feels even better, but sadly for Shang, not all correlations are equal.

With the price-earnings ratio of Shanghai stocks, based on last year’s earnings, now rising above 70 times, Shanghai is valued at about three times many foreign markets. Hong Kong's ratio is 24 times.

Factor in the distorted price-earnings ratio, which has resulted from China’s stock markets acting like anything but a barometer of China’s underlying economy, and the correlation begins to look like nothing more than co-incidence.

But this week is China’s party, and they can spin if they want to.

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