CHINA should set up a stock stabilization fund as soon as possible to boost market confidence, with an aim to get its size to 10 trillion yuan (US$1.4 trillion) or more, according to an academic at a government think tank.

The size of the fund should be around US$300 billion to US$500 billion in the short term, the 21st Century Business Herald reported, citing Liu Yuhui of the Chinese Academy of Social Sciences. It should then be increased based on the value of the country’s capital market, Liu told the paper.

The stock market has undoubtedly shown liquidity pressure in the short term, Liu said, speaking to the paper in his capacity as director of another think tank known as China Chief Economists Forum.

Much of the buying power comes from the “national team” to maintain stability, he added. (SD-Agencies)