The COVID-19 pandemic disrupted China’s stock indices and brought to a halt a decade-long expansion in the property market. Initial lockdowns in early 2020 triggered sharp declines in asset prices, while subsequent events—most notably the defaults of major developers such as Evergrande in 2021—signaled systemic financial stress ( Zhang et al., 2020 ). Retail investors in Beijing and Tianjin, already navigating fragmented and rumor-heavy information flows, found themselves facing an unprecedented climate of uncertainty. Retail investors in Beijing and Tianjin—already navigating rumor-heavy news flows—faced unprecedented uncertainty.

This paper argues that information asymmetry is a central problem. Over 90% of China’s markets’ participants are small investors, financial information in China is often distorted or selectively released, leading to a pervasive sense among investors that “information is always manipulated” ( Carpenter et al., 2021 ). In the absence of timely and trustworthy information, many households turned to informal sources such as social media, personal networks, and fragmented official announcements ( Xu et al., 2023 ). Market crashes magnified the cost of these gaps: policy rumors spread faster than clarifications, and many could not gauge real risks ( Si et al., 2021 ).

The natural comparison of Beijing and Tianjin was offered. Beijing houses regulators and national media; Tianjin, an industrial hub, felt the property slump acutely. The 2023 survey investigation examines:

Answers matter practically—millions of investors hold homes or shares—and theoretically, because of the fact that they test how information failures distort behavior in a state-influenced media landscape. Prior interventions, such as censorship during the 2015 crash, show that crisis management can erode transparency and trust. Similar dynamics are likely to magnify pandemic-era uncertainty, limiting any informational advantage Beijing residents might enjoy.

The paper proceeds as follows: Section 2 synthesizes prior work on market volatility, information asymmetry, and behavioral bias in China. Section 3 outlines the survey design and sample. Section 4 presents results on search habits, trust, regret, and future intentions. Section 5 discusses implications—including mentalhealth stakes—and Section 6 recommends reforms to disclosure, media practice, investor education, and institutional incentives.

China’s financial markets have often been characterized as volatile and heavily driven by investor sentiment, in part due to the informational environment. A substantial body of literature points to the dominance of retail investors in China’s stock market and the attendant effects on market behavior. Yin et al. note that over 90% of Chinese stock investors are individuals (rather than institutions), many of whom engage in speculative “herding” behavior ( Yin et al., 2016 ). This herding, combined with leverage and derivative trading, has at times made the stock market resemble a casino driven by rumors and momentum ( Yin et al., 2016 ); further emphasizes the importance of information in such an environment, finding that the ability to forecast market trends is significantly related to individual investors’ decision-making. When reliable forecasts or data are lacking, investor behavior can become destabilizing a sudden panic or exuberance spreading through the retail crowd.

One critical factor is the quality and transparency of information available to investors. Chen et al. investigate the Chinese stock market’s dynamics and observe that media and transparency play a crucial role in price patterns ( Chen et al., 2022 ). Uniquely, China’s media operates under a regulatory regime that can shape news dissemination ( Chow, 2015 ). Chen et al. highlight that media reports in China often serve as official “guidance” rather than independent analysis. Moreover, they point out that the Chinese market’s information environment is fraught, financial information “is always manipulated” to some extent.

This manipulation might involve overly optimistic official statements, selective disclosure by firms, or outright rumors circulating in online forums and social media. Chen et al. argue that truly reliable information becomes “intriguing”, a scarce commodity commanding premium valuation when identified. Their study shows that stocks with both high transparency and intensive media coverage exhibit momentum effects rather than price reversals, suggesting that enhanced information clarity facilitates more rational investor behavior (i.e. aligned with fundamentals) ( Chen et al., 2022 ). Conversely, low transparency and limited media coverage tend to generate price reversals and market anomalies, which the authors interpret as evidence of information asymmetry-driven trading ( Chen et al., 2022 ).

These findings resonate with prior observations on China’s institutional context. Chow examined China’s anti-corruption enforcement and found a paradox: increased enforcement led to decreased transparency. In corruption cases, the true reasons for official decisions were often hidden, engendering public mistrust and a sense of unpredictability ( Chow, 2015 ). By analogy, in financial markets, government interventions or behind-the-scenes decisions (for example, instructing state banks to buy shares to prop up the market, as occurred in 2015) can leave investors guessing at motives and future actions. This opacity undermines confidence. If investors suspect that corporate disclosures or government economic data are not fully truthful, they may either overreact to worst-case scenarios or, alternatively, place unwarranted faith in implicit government backing. Both situations were seen during the pandemic: some investors hung on to failing property investments believing authorities would rescue the sector, while others fled at the first sign of trouble, fearing hidden bad news.

Information asymmetry, where some parties have or act on information that others lack, is a classic market failure often discussed in the context of finance (Akerlof’s “lemons” problem being a famous example). In China’s real estate boom, asymmetry manifested in developers and local officials having more knowledge of true market conditions (like oversupply or debt levels) than individual homebuyers. Due to massive reliance on land sales, government was incentivized to try to keep up artificially high land and property prices, despite housing oversupply of over 60 million ( Li, 2024 ). During the pandemic, when sales stalled and projects halted, many retail property investors were caught by surprise: they did not know, for instance, that a developer was over-leveraged until it was too late. Feng describes the post-pandemic housing market slump as the result of “cumulative effects of long-standing issues that have been persistently tolerated,” with nearly all key indicators worsening ( Feng, 2025 ).

These long-standing issues include excessive debt, speculative bubbles, and lack of accurate risk disclosure. Feng notes that the downturn is “unprecedented in recent decades” and poses a systemic risk to China’s economy, serving as an alarm bell regarding the country’s “unhealthy financial system” ( Feng, 2025 ). One indirect cause identified is the failure of government policy and supervision in preventing the bubble ( Feng, 2025 ; Gao et al., 2024 ). In other words, institutional actors did not provide or enforce the information needed for a healthy market, such as realistic assessments of demand or strict disclosure of developers’ financials.

In the stock market context, the pandemic introduced new layers of uncertainty, not only were investors dealing with the usual opacity of China’s market, but also the unpredictability of a global health crisis. Empirical studies have quantified the pandemic’s impact on Chinese market volatility. Zhang et al. conducted a sector-level analysis and confirmed that COVID-19 case announcements and deaths led to higher short-term volatility across industries. Although the magnitude was “small” relative to normal volatility, the effect was consistent and significant. Interestingly, they found daily reported COVID deaths had a larger impact on volatility than case numbers, perhaps because deaths signaled a broader failure to contain the virus, with dire economic implications ( Zhang et al., 2022 ). Over the longer run, firm fundamentals (like asset size and liquidity) regained importance, implying that initial overreactions gave way to more fundamental-driven trading ( Zhang et al., 2022 ). This aligns with global findings that the pandemic shock caused a spike in uncertainty and volatility, followed by partial normalization as information about the virus and policy responses became clearer ( Zhang et al., 2022 ; Locke, 1948 ).

Despite these quantitative insights, less has been documented about investor information behavior amid the pandemic in China, particularly at the retail level. Qualitative evidence, however, suggests that many investors turned to informal channels when formal ones proved inadequate. Social media platforms (like WeChat groups, Weibo, or Tiantian Finance forums) likely buzzed with speculation when official data was seen as slow or untrustworthy. A common refrain among Chinese retail investors is “zuo ren jian bu ru, zuo gu jian si” (“Better be dead than an investor”), which reflects the cynicism and perceived peril of playing the stock market without insider knowledge. During the 2020-2022 period, investors swapped stories of sudden policy shifts, for example, surprise regulatory crackdowns on tech firms in 2021 that wiped out billions in market value overnight, fueling a sense that one could be blindsided at any time.

There is also a psychological dimension to how Chinese investors interpret information. Culturally, real estate has been considered a safe haven in China for decades, a belief that “house prices never really go down” was widely held. This belief was reinforced by the government’s past actions to shore up the property market in downturns. However, the pandemic crisis and events like Evergrande’s near-collapse have fundamentally shaken that confidence. In behavioral terms, many investors had a confirmation bias, seeking information that supported the notion that buying property is always wise. When contradictory evidence (falling prices, vacant apartments) mounted, cognitive dissonance set in, and some may have clung to outdated beliefs longer than they should have. Others, conversely, swung to pessimism, possibly overcorrecting in their outlook. The interplay of belief and responsibility comes to the fore here: This raises the question of whether investors were “responsible” for their poor outcomes if crucial information was missing or actively concealed? Philosophers like John Locke argued that individuals are responsible for their beliefs only once they have the means to acquire knowledge ( Locke, 1948 ). In the context of this study, this raises the point that Chinese investors can only be so accountable for investment mistakes if the information necessary for knowledge (e.g. true risk levels) was not accessible. On the other hand, once aware of uncertainties, an investor does have a responsibility to be cautious, a point that will be returned to in the discussion of recommendations around investor education and due diligence.

Finally, extreme consequences of the crashes have been documented that underscore the stakes of getting information and decisions right. Beyond monetary loss, there have been mental health impacts. A recent large-scale study by Gao et al. demonstrated a tangible link between stock market volatility and adverse health outcomes in China ( Gao et al., 2024 ). Analyzing over 12 million death records, Gao and colleagues found that a mere 1% daily drop in stock indexes corresponded to a 1.77% rise in suicides ( Gao et al., 2024 ). This startling statistic highlights how vulnerable individuals can be to financial stress, literally life and death in extreme cases. It also implies that more stable, transparent market conditions could have public health benefits. In 2015’s stock crash, media reported incidents of investors and even a fund manager taking their lives after incurring massive losses ( Xiao et al., 2025 ). During the pandemic crashes, similar tragedies have been noted anecdotally, though comprehensive data are not yet available. What is clear is that the collapse of asset values, whether one’s home or retirement portfolio, can have devastating psychological effects, especially when people feel blindsided. This further emphasizes why understanding information flows and improving them is so important: with better information and risk communication, some of these dire outcomes might be averted, as investors could make more prudent choices and have more realistic expectations.

In summary, the literature suggests that Chinese investors operate in a challenging information environment that often skews behavior and outcomes. Both structural factors (like media control and lack of transparency) and behavioral biases contribute to the problem. The pandemic-era market crashes provide a natural experiment to observe these dynamics under stress. This study will contribute to the literature by providing empirical data on how investors in Beijing and Tianjin actually navigated this environment, how frequently they sought information, where they got it, whom they trusted, and how satisfied they were in hindsight, and by discussing the implications for market stability and policy.

The insights from this study carry important implications for stakeholders ranging from policymakers and regulatory bodies to investors and financial educators. Rebuilding confidence in China’s markets will require concerted efforts to improve transparency, restore trust, and promote responsible investment practices. Below, this section outlines key recommendations and their rationale:

Chinese regulators and companies must prioritize timely, accurate, and comprehensive disclosure of information. This means strengthening reporting requirements for publicly listed firms and property developers, for instance, mandating more detailed quarterly updates on financial health, project progress, and risk factors. During the pandemic, many investors were left guessing about developers’ liquidity or companies’ exposure to lockdown effects. Going forward, regulators (such as the China Securities Regulatory Commission for stocks and housing authorities for real estate) should implement crisis-time disclosure protocols. For example, if there is a significant event (like a default risk or a major policy change), official bulletins should be issued promptly to all investors. By leveling the information playing field, authorities can reduce the advantage of insiders and curb the spread of rumors. Chen et al. demonstrated that high transparency combined with media coverage can change market behavior toward more rational outcomes; thus, providing clear data to media and the public is crucial ( Chen et al., 2022 ). Moreover, enhancing transparency can mitigate the mistrust issue, when investors see that bad news is not being swept under the rug but openly addressed, it “builds the trust” nrather than erodes it ( Chow, 2015 ). One concrete step could be creating a centralized, government-run online information portal for each market (stock and real estate) where all critical announcements, data releases, and even verified clarifications of rumors are posted in real-time. Investors indicated “no access to channels” as a major barrier; a well-publicized official channel could fill this gap, provided it earns credibility through truthful content.

(1) Improve Media Communication and Credibility: There is an evident need to restore credibility to the information that flows through media channels. State media and financial news outlets should be empowered (and instructed) to practice more investigative and independent reporting on market conditions. During the boom years, media often echoed optimistic government or industry narratives; a more balanced approach would include reporting on warning signs (e.g., rising debt, overheated prices) when present. Regulators can collaborate with media to ensure that expert analyses (including potentially negative outlooks) are not censored but rather disseminated along with official views. When investors see divergent perspectives allowed in mainstream discourse, it increases the chance they’ll catch on to risks earlier and it combats the perception that “information is always manipulated” ( Chen et al., 2022 ). Additionally, media literacy programs can be introduced so that investors learn to identify reputable sources and false rumors. Platforms like WeChat and Weibo, which many investors use, could partner with fact-checking services to flag or correct viral misinformation about markets. This is delicate in China’s context due to censorship issues, but the emphasis should be on correcting factual errors (e.g., a viral post claiming a bank failed when it hasn’t) rather than suppressing negative but true news. Essentially, the media’s role as an information conduit must be reformed such that investors feel they can trust the news again. Regulators might also consider regular press conferences during crises (akin to what central banks do during financial turmoil in other countries) to answer questions and provide guidance, putting a human, accountable face to information provision.

(2) Investor Education and Financial Literacy: This study highlights that many individuals, even well-educated ones, did not fully appreciate the risks or perhaps the strategies to mitigate them. There should be a nationwide push for investor education programs. These can be done through seminars (virtual or in-person), easily accessible tutorials, and integration into school curricula or community workshops. Key topics should include risk management (e.g., the importance of diversification, many respondents had most of their wealth in one asset class like property), understanding financial disclosures, and critical evaluation of information sources. For example, investors should be taught how to read a developer’s balance sheet or a fund’s prospectus and recognize warning signs (like high leverage ratios). They should also learn about cognitive biases, e.g., how groupthink on social media can lead one astray, or how confirmation bias can cause one to ignore contrary evidence. Empowering investors with these skills improves their own decision quality and makes them less susceptible to being misled. This aligns with Locke’s notion that once individuals have the means to gain knowledge, they must use it responsibly, thus education provides those means. It may be worthwhile for regulatory agencies to collaborate with financial institutions to create certified courses. Brokerage firms and banks in China could be encouraged (or required) to offer free educational sessions to clients, essentially as a public service. An informed investor base will likely lead to a more stable market in the long run, as people will not overreact as severely if they understand the underlying context (Zhang et al. found fundamentals eventually reasserted in 2022, implying educating about fundamentals could shorten the period of overreaction) ( Zhang et al., 2022 ).

(3) Strengthen Investor Protection Mechanisms: Alongside education, protective regulations can buffer small investors from the worst outcomes. For instance, introducing or tightening circuit breakers and position limits could prevent inexperienced investors from leveraging too much or losing more than a certain amount in a day. Some of this exists but could be refined (China had circuit breakers in 2016 briefly that were problematic; lessons from that can be applied differently). Also, ensuring robust enforcement against fraudulent practices is key. If a company misleads investors (as some property developers arguably did by hiding debt off balance sheet), there should be legal consequences and compensation mechanisms. This deters the supply of bad information. The government might also consider setting up a fund or insurance scheme for extreme events, not to bail out speculators, but to provide some relief in systemic crises (for example, partial compensation to small investors when a major, system-wide fraud or collapse occurs). Knowing that such a safety net exists can reduce panic-induced selloffs or distress. It also signals a sense of responsibility and solidarity from institutions towards citizens, which can rebuild trust.

(4) Foster a Culture of Responsibility and Ethics: Corollary to rules and education is the need to shift the culture among both investors and information providers. Investors must be encouraged to take responsibility for due diligence, once better tools and info are available, they should make use of them rather than blindly follow crowds. Campaigns akin to “invest with your eyes open” can be run, reminding investors that ultimately, it’s their money at stake and decisions should not be made on hearsay. On the flip side, there should be an ethical code enforced for analysts, advisors, and media personalities. For example, conflict of interest disclosures should be mandatory (so an investor knows if an “expert” touting a stock on TV stands to benefit from it). Professional bodies in finance could develop codes of conduct about truthful communication. Over time, if such ethical norms are observed, investors might regain faith in professional advice and media commentary, currently underutilized or distrusted by many in sample. Essentially, a social contract must be rebuilt. Investors will put trust in markets and refrain from overly speculative behavior if they believe they are being given the straight truth, and in turn regulators and market participants owe them that truth.

(5) Address Systemic Issues and Align Incentives: On a policy level, deeper reforms may be needed to address the root causes of the asymmetries. For real estate, this could involve revisiting the model of local government finance so that local authorities are not so dependent on land sales and hence not so incentivized to hype property markets. Reducing that dependency (for example, through fiscal transfers or developing alternative revenue sources like property tax) could make local governments more willing to allow housing prices to reflect fundamentals and to be transparent about oversupply. In the stock market, continued reforms toward institutionalization (getting more institutional investors in, who tend to trade on fundamentals and information rather than speculation) could help stabilize things, indeed, a market with too high a proportion of uninformed retail traders is known to be more volatile. Encouraging more professional analysis and institutional presence (like pension funds, mutual funds) can improve the information environment, as these entities often demand better disclosure and have the clout to obtain it. Over time, a more mature market participant base can set examples in how to process information and manage risk, which retail investors can emulate or take signals from. Essentially, aligning incentives (so that companies and officials see benefit in honesty and investors see benefit in prudence) is the long-term path to a healthier market ecosystem.

In implementing these recommendations, it is important for government agencies, such as the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission, and housing ministries, to coordinate. The holistic nature of the crisis (affecting multiple asset classes and regions) means piecemeal fixes won’t suffice. A coordinated task force on “investor confidence restoration” could be established to oversee improvements across the board. Additionally, involving investor advocacy groups (which are not very prominent in China but could be supported) may provide feedback on what information or support investors truly need.

The pandemic-induced crashes in China’s real estate and stock markets were a stern test of the country’s financial system and the resilience of its investors. Through a comparative analysis of investor behavior in Beijing and Tianjin, this paper has illuminated the pivotal role of information, its availability, quality, and perceived credibility, in shaping investment decisions and outcomes during the crisis. The findings paint a picture of investors striving to navigate markets with the information at hand, yet often finding that information insufficient or unreliable, leading to widespread regret and retreat from the markets.

Investors in both cities reported seeking information frequently and from numerous sources (internet, social media, personal networks), but a majority still felt they had not been adequately informed prior to making their decisions. In hindsight, upwards of 80% would change their past investment choices if they had possessed more knowledge about the true risks involved. These sobering statistics underscore that lack of transparent, trustworthy information was at the heart of poor decision-making. In essence, many participants in the markets were “fighting in the dark”, a darkness created by delayed disclosures, biased media messaging, and the inherent unpredictability of a once-in-a-century pandemic event.

The consequences were severe: significant financial losses for many, a collapse in confidence (with about four out of five surveyed investors indicating they will avoid real estate or stock investments in the near future), and intangible costs in terms of stress and well-being. In extreme cases, volatile markets even carried human life costs, as evidenced by external research linking market downturns to spikes in suicides ( Gao et al., 2024 ). The social fallout from these crashes is thus not merely an economic concern but a broader socio-economic issue affecting household stability and public trust.

Comparing Beijing and Tianjin, the survey found that while their investors may have had somewhat different access or emphasis in information sources, their experiences and reactions were remarkably similar. This suggests that the issues the survey identified are systemic to China’s financial milieu rather than location specific. Both a sophisticated first-tier city like Beijing and a major second-tier city like Tianjin saw investors struggling with information asymmetry and subsequently pulling back from the markets. This universality strengthens the call for nationwide measures to address the problem.

The analysis leads to a clear overarching conclusion: information-gathering behaviors and investment decision-making in times of crisis are only as good as the informational environment allows them to be. When the informational environment is fraught with opacity, inconsistent messaging, and rumors filling gaps, even prudent and educated investors will be hard-pressed to make optimal decisions. In China’s case, the pandemic era crashes revealed cracks in the information infrastructure underlying its booming markets.

However, within this conclusion lies a hopeful corollary: if the informational environment can be improved, through greater transparency, better education, and restored trust, then investor behavior and outcomes can improve as well. Markets do not have to devolve into panicked selloffs or speculative manias; with responsible policies and informed participants, they can move toward more sustainable dynamics. According to MIT Sloan News, those who have clearer and better financial data, make better financial decisions, and transparency is a key part of good financial data and decisions ( Zhang et al., 2023 ; Yoro, 2024 ).

The recommendations the survey outlined are aimed at that target. By enhancing transparency, the asymmetry of information can be reduced, so the next time a shock looms, investors aren’t left grasping in a data vacuum. By improving media credibility, the noise can be filtered out and signals clarified, so investors know which warnings to heed. By educating investors, the populace becomes more resilient, they learn to question, to verify, and to prepare, rather than simply follow the herd. By strengthening protections and ethical norms, the worst abuses can be curtailed and trust slowly rebuilt.

Implementing these changes will require commitment and perhaps cultural shifts. It is encouraging that in recent months and years, Chinese authorities have shown awareness of these issues, for example, discussing the need to guide expectations in the property market and to crack down on misinformation in stock forums. The survey provides empirical backing to the notion that such efforts are not just beneficial but essential. The voices of the 115 investors captured in this study echo a common refrain: “We would have acted differently, if only we had known.” It is a lesson written in financial loss and personal hardship.

If regulators and policymakers heed this lesson, the legacy of the pandemic crashes could be a stronger financial system, one that values truth and responsibility as much as growth and innovation. The comparative lens of Beijing vs. Tianjin shows that no region is immune to these challenges, meaning solutions must be broad-based. Indeed, the findings likely generalize beyond these two cities to China’s investor population at large, and perhaps even to other emerging markets where retail investors play a big role under fast-evolving conditions.

In conclusion, the turbulent story of China’s pandemic-era market crashes is as much a story of information failures as of economic shocks. Fixing the information flow is a prerequisite to empowering investors and stabilizing markets. As China transitions into a new phase of economic development post-pandemic, incorporating these lessons will be vital. A more informed investor is a more confident investor; and a market with confident, well-informed participants is less prone to crash in the first place. By ensuring that investors in Beijing, Tianjin, and across China can make decisions with eyes wide open, armed with knowledge and grounded in reality, stakeholders can help prevent the extreme boom-bust cycles of the past and foster more sustainable growth in the future.