An old friend of mine from my Bear Stearns days sent me this email:

“…the china story is waaay overblown – most people don’t know the difference between A shares and H shares – A shares are what went down 10% last night – they are only able to be owned by local Chinese – the H shares are the ones which trade on the Hang Seng (in Hong Kong) and are able to be purchased by foreigners – anyway the A shares trade at about a 71% premium to the H shares – which means that todays selling is waaaaay overdone.”

That said, China appears to be taking over-regulatory steps to crack-down on a so-called speculative bubble stock market of the past 18 months, including capgains taxes on land, higher bank reserve requirements, and higher central bank interest rates. This is anti-growth IMF/G-7/US Treasury stuff. Their real GDP is about 10%, with only 2% CPI.