The Scattered Accounts: Trading Dynamics and Community Formation Among Retail Investors (Sanhu) in China’s Stock Market

Abstract

The Chinese stock market is known for its volatility. Even after more than three decades of establishment, the Chinese stock market continues to be experimental, representing the socialist state’s attempt to explore a market economy that aligns with its governance. Commentators often attribute this instability to the market’s immaturity and susceptibility to further regulatory adjustments. A primary concern is the substantial presence of individual retail investors, who have been actively trading since the stock exchanges resumed in 1990 and now account for over 60% of the trading volume. There are more than 200 million registered individual trading accounts, with an estimated minimum of 20 million active traders, and new investors continue to join using their private savings. What motivates people to participate in the stock market? Who are these amateur traders, and how do they trade? This thesis presents an ethnography of the stock market and the people within it, exploring the complex dynamics of the Chinese stock market through the lens of amateur retail investors, known as ‘sanhu’ (散户). The study aims to provide an account of the lived experiences of sanhus within China’s unique political-economic system, particularly through the perspectives of a group often perceived as cynical and irrational. By examining the experiences and behaviours of modestly resourced individual investors, the thesis analyses the specific characteristics and ongoing evolution of China’s political and economic system, focusing on its impact on ordinary people’s lives and their adaptation to evolving circumstances while pursuing personal aspirations. This thesis conceptualises the stock market not only as a financial entity but also a social arena reflecting its participants’ financial, economic, and political beliefs. The thesis sees the lively, sometimes self-contradictory, yet often innovative trading practices of individuals as a form of qualitative calculation that prevails beyond economic life (Chapter 1). It illustrates how sanhus tie themselves to the concept of the ‘national economy’ through their investment portfolios. The study posits that through trading, sanhus integrate their aspirations for a better life into the state’s agenda for a collective future (Chapter 2). In their attempts to understand and act on market fluctuations, sanhus have developed innovative strategies to interpret and respond to them. They resonate with diverse cultural narratives that explain the market as a relational space with various types of characters who cope with, adapt to, and occasionally subvert the broader forces at play (Chapter 3). I suggest for sanhus, trading mobilises their personal knowledge into practice, creating a self-improvement project to become the exceptional winner (Chapter 4). In such a market of opaque regulation and scandalous traps, the thesis explores how sanhus persist in their long-term engagement. It contends that a pervasive sense of mistrust shapes how they understand the market and each other, sharpening tactics of negotiating one’s disadvantaged position (Chapter 5). In summary, the thesis asserts that, in addition to financial incentives, trading provides sanhus an opportunity to negotiate their socio-political status within the Chinese state’s overarching narrative of national history, amidst the increasing social disparities.