China tries to reassure investors as stocks plummet

BEIJING -- In a matter of just weeks, the world's second-largest economy has seen a whopping $3 trillion wiped off the value of its stocks.

CBS News correspondent Seth Doane reports the plunge in the stock market in China is very much a domestic issue -- not linked to problems in Greece -- but it could be destabilizing in Asia.

The ruling Communist Party has been working hard to try and stem the losses, prop-up stocks and stop panic-selling.

The benchmark Shanghai index has dropped 30 percent since its peak in mid-June, but those loses follow such huge gains that, overall, the index is still up 70 percent on the year.

Also important to bear in mind; China's stock market makes up a considerably smaller proportion of the overall economy than the markets in the U.S. and other developed nations.

About 80 percent of players on the Chinese stock market are so-called "mom-and-pop" investors -- two thirds of whom didn't finish high school. These small-time, inexperienced investors have borne the brunt of the losses.

China's government had worked as a cheerleader, reports Doane, encouraging people to invest, and many borrowed money to buy shares.

Now, the government is trying to manage fears, largely via its state-backed newspapers. There were reassuring stories in the headlines Wednesday, including a feature about how "not everyone is losing heavily."