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Shanghai Should Continue to Sell Off

Addendum: I do agree with the article that the banking system is a huge liability in China and I have had this view for a long time now. However, the main engine of growth is not the stock market but the real economy which has many problems but, IMHO, is not as bad as the stock index would seem to indicate as explained in my previous comment. GLTA again.

Shanghai Should Continue to Sell Off

Let me be a bit extreme to make my point:
1. How many Chinese companies with more than 500 employees are listed in China? My guess: no more than 2%. If anyone has a better guess or study, please post.
2. If the Shanghai stock market drops to zero, what would be the impact on people's livelihood, the economy and the government? My guess again, not much since the stock market, as many people pointed out, does not act as a major wealth/resource allocator yet. It is more like a casino and people go to Las Vegas to lose money without much impact on the US economy.
My conclusion: the Chinese stock market does not have the same impact on the Chinese economy as the NYSE has on the US economy. There is no reason to link the index directly to the performance of the real economy. Therefore, there is no need to worry too much about the index itself. Besides, the index is not a very good indicator of the economy at all due to the make up of its components which I do not want to elaborate here due to space/time limit. GLTA.