Now to the errors and how to correct them. Probably the biggest mistake of the last decade was the effort starting in the autumn of 2014 to talk up the stock market.

By the middle of 2015, the Shanghai index had doubled, a rise that was totally divorced from economic fundamentals. Although the mainland stock market has a much smaller impact on the overall economy than in more advanced countries, when the inevitable crash came the PR effect was devastating. China is in the East, and media reports of the day's trading begin with Tokyo, Sydney and Shanghai. The repeated sharp drops in stock prices and the clumsy attempts to prop up the market therefore attract worldwide attention every day.

China needs to follow more closely President Xi Jinping's directive and let the market take a decisive role. That means accepting modest price/earnings ratios which create a healthy market. There is nothing to be gained by delay, so authorities should withdraw the special support measures and take the hit. Thereafter they should let the market find its true level and become a serious arena for solid companies to raise capital.

The next question concerns the exchange rate. By the middle of last year, the authorities had (correctly) concluded that the yuan was overvalued. They then devalued it for which the rest of the world was psychologically unprepared. The urgent need, therefore, is for more transparency. China should seek IMF assistance in assessing a reasonable value for the yuan, then move toward that figure using a "crawling peg" methodology. From that point on, the market should be allowed to determine a fair price.

China has joined the majors in the world economy club. It's time it played by the big boys' rules, too.

The author is a Hong Kong-based private consultant and adjunct professor at the Chinese University of Hong Kong.