The recent Mother of All Corrections in Chinese stocks – which wiped out a $3.8 trillion on paper - inevitably led the usual US “experts” to forecast, once again, China's imminent collapse. Hong Kong even resuscitated the “regime change” meme.

Nonsense.

The roller coaster lasted a few days. And then it was gone. Significantly, major US funds – including Fidelity and Goldman Sachs – were among the first to declare the turbulence over, and move on. Goldman Sachs, by the way, soon reverted to bullish. Its chief China economist, Kinger Lau, predicted that Shanghai will rally 27 percent over the next 12 months.

So this is not a bubble. At least not yet. Beijing has a lot of tools to – as newspeak goes - “support the market.” According to Little Helmsman Deng Xiaoping’s maxim, “Socialism with Chinese characteristics,” which will stop at nothing to control the “irrational exuberance” of the markets.

The IMF – considering its disaster capitalism record all across the developing world, not to mention the post-1997 Asian financial crisis – is never a reliable source. But in this case, IMF chief economist Olivier Blanchard at least did not make a fool of himself; he emphasized China’s casino stock market “doesn’t reflect on the fundamentals” of its economy. The slump, he added, “was very much a sideshow.”

(http://www.autoadmit.com/thread.php?thread_id=2972387&forum_id=2#28620537)