China still hasn't digested the lessons from the recent stock market rout, let alone learned them.

Many young investors, those born in the 1980s and 1990s, who didn't get to see the effects of the Asian financial turmoil in 1997, and, starting in 2007, the almost seven-year bear market in domestic stocks, may have yet to recover even from the shock they have just experienced.

But as we discussed in the past few weeks, there can be two main types of lessons to be learned. One is about economics. And the other is the management of the market and trading practices.

In economics, there is a straightforward lesson: that a bull market, as seen in the earlier months of the year, cannot keep charging when the fundamentals of the real economy remain weak.

If the Shanghai Composite Index had risen from 2,000 points to 3,000 points only a few weeks earlier, it would be hugely irresponsible for any self-appointed authority to claim that when it hit the 4,000-point level, it was only the beginning of good times.

Rational investors cannot afford to forget the simple fact that China is right now going through a very painful, and potentially very costly, transition, and the end is far in the future. The range for a rise in the stock market index can, at such times, only be limited.

Of course the top leaders' anti-corruption drive is making good progress. One can easily get a feel about the welcome progress by going over the WeChat－the Chinese equivalent of WhatsApp－messages netizens pass around on a daily basis.

There are also national policies and big plans to ensure the economy's continuing growth, and the premier's office keeps reminding local officials of their duty to deliver the GDP target decided earlier this year.

But all these still remain conceptual. It will take time, and some serious political efforts as well, for them to translate into the policies and plans that can be attested by statistics and consumer reactions.

If, as central government officials have repeatedly said, the economy's old growth model is no longer working, then any sober-minded person would be able to tell how big a part of the real economy is to go with it. As heavy industries, along with material suppliers, stop growing as fast as they once did, replacement industries are still hard to come by.

In the management of the stock market and trading, Chinese regulators still seem out of touch with some of the basic realities in the country. The key is not to restrict trading, but to understand the market psychology and how it works.

More than ever, the Chinese stock market has become social media-driven. Some WeChat messages (and not all of them rumor) have an almost instant influence on both retail investors and small funds, which make up the majority of the participants in daily trading.

Things would inevitably become hard to manage when most investors are under the sway of a mentality that aims only at instant gain, an implicit lack of belief in the future, especially the economy's ability to deliver good long-term growth.

Therefore, it may be a mistake to start with to expect a lot of sunshine when clouds are still hovering and there isn't a strong wind.

When the economy's overall picture remains cloudy, investors might have been encouraged to buy more government-backed bonds rather than stocks of companies that are still struggling in their business transition. And if the government has already incurred an unattractive amount of debt, as seen in quite a few cities, it might just have to sell some assets or their management rights to private investors.

Doing so would fit well with the top leaders' "mixed-ownership" scheme. It was designated as one of the key reforms to pursue in the Third Plenum of the Party in 2013, but little has been done since. After all, citizens will have to see more actual progress in reform to regain long-term confidence.

The author is editor-at-large of China Daily. Contact the writer at [email protected]