Free stocks from $10-trillion roller-coaster

Both the volatility and the three-week index dive in Chinese stock markets have been beyond the wildest imagination of most investors and should prompt the country's policymakers to take immediate and effective measures to preempt panic in the stock market. But while doing so, they should be careful not to mislead investors with the impression that the government is out to boost share prices at any cost.

With the benchmark Shanghai Composite Index closing at 3,686.92 points on Friday, the Chinese stock market has plummeted by nearly 29 percent over the past three weeks. This decline is in sharp contrast to a year of spectacular gains that inflated its total value to more than $10 trillion in June, roughly the size of the country's gross domestic product in 2014.

Given the huge size of the Chinese stock market, it is more than obvious that the country's securities watchdog must take action to prevent an overdue market correction from spiraling out of control and causing irremediable damage to not only the stock market but also the real economy.