SHANGHAI, China (AP) _ Sitting in rows of plastic seats facing a flashing wall of numbers, the crowd at Great Wall Securities is watching the most exciting show in town: soaring stock prices.

``I started buying stocks last year. I don't have many, but they're up about 20 percent,'' said Sun Xialong, a 37-year-old businessman. Without taking his eyes off the flickering prices, he said, ``I'm staying in the market. I think it will go higher.''

China is in the grip of stock market fever. After two years in the doldrums, its two exchanges have risen more than 50 percent in the past month. Shares change hands in record numbers as millions of new investors pile into the market.

The new enthusiasm is fueled not by higher corporate profits, but by explicit official steps. The government, which wants the markets to finance economic reform, has cut interest rates and called for stock prices to rise. Even the ruling Communist Party newspaper People's Daily is talking up the markets.

Brokers say that in a heavily state-dominated economy, official policy counts as much as profits and other economic factors.

``Now that the government has made up its mind to take steps to boost the market, a lot of people have regained confidence,'' said Gary Liu, a trader for Paribas SA's China unit.

The boom is taking place against a backdrop of economic uncertainty. Reforms of unprofitable state industry are costing millions of jobs. Economic growth is targeted for 7 percent this year, but only because of massive government deficit spending to stimulate consumption.

The stock markets in Shanghai and the southern city of Shenzhen exemplify the split personality of a Chinese economy that is still only partly capitalist.

The government owns all securities firms and banks, as well as large stakes in most publicly traded companies. Investment arms of provincial and city governments have been major speculators.

Foreigners are barred from trading most stocks and allowed to buy only dollar-denominated ``B'' shares issued by a handful of companies. But most foreigners have pulled out because of low profits, leaving ``B'' shares to Chinese investors who can get their hands on dollars.

Investing in China's stock markets has never been for the fainthearted. Trading is dominated by speculative binges and wild swings in price. Complaints of insider trading and abuses by brokers are widespread.

After making some speculators rich in the mid-1990s, stocks plunged in 1997 as corporate profits weakened and officials warned that markets were overvalued.

In recent months, the government has taken steps to lure back investors. Regulators cut taxes on trading and say foreigners will be allowed for the first time to buy shares in private companies _ the most profitable, attractive part of the economy.

Banks in early June slashed interest paid on savings accounts to encourage Chinese families, which save an average of 40 percent of their incomes, to move money into stocks.

The boom has boosted the total value of Chinese stocks to $289 billion, according to the state newspaper, Shanghai Securities News.

The main index for the Shanghai market is up 51 percent since mid-May and hit an all-time high this week, while Shenzhen is up 54 percent. ``B'' shares are up 113 percent in Shenzhen, and 78 percent in Shanghai.

People's Daily added to the frenzy last week with an extraordinary front-page editorial crowing over rising stock prices and saying they should go higher.

At the Shanghai Stock Exchange, traders who recently spent much of their day reading or knitting are frantically filling orders at computer stations.

Once-empty brokerage branches are filled with customers. At the Great Wall Branch in central Shanghai, customers gather around automated terminals to buy and sell.

Investors in Shanghai are pawning watches, jewelry and deeds to houses to raise money, the official Xinhua News Agency said today. It said the number of personal loans taken out at one unnamed bank has doubled since March to 2,000 a month.

``We believe that most of the new loans have flowed into the stock market,'' an official of the bank was quoted as saying.

Despite official enthusiasm, an influential government journal is warning that this boom can't drive growth as rising technology stocks did in the United States.

The Securities Market Weekly, in its June issue, said a market driven up by speculation wouldn't produce steady profits necessary for growth. An improved economy, it said, will drive up stock prices _ not the other way around.