1. Investors selling stock has zero bearing on the operation of a factory, barring certain edge cases. Companies extract money from the stock market by issuing IPOs, after that happens, it doesn't matter to them very much at what price their shares are traded. See my previous post - just because the stock value drops, doesn't mean that actual assets, know-how, expertise, or training disappears into thin air. [1]

2. Foreigners selling will lead to locals buying. Those firms will simply go from majority-Chinese-owned, to Chinese-owned.

3. Stock markets don't just go up all the time, sometimes they correct.

[1] It does in the United States, but that's because during slumps, the government is very skittish when it comes to creating demand, outside of the MIC. The CCP takes a longer view, and actively prioritizes building up China's industrial base, as opposed to dismantling and offshoring it.

citation needed for your first point: "Companies extract money from the stock market by issuing IPOs, after that happens, it doesn't matter to them very much at what price their shares are traded"

It matters to the people running those companies (Because they own a lot of stock, or work for people who own a lot of stock). It matters less for the firms, themselves.

A high stock price prevents a corporate takeover (which is not a real-world-value-destroying activity - factories operated by a company don't burn up when it happens), and it makes it possible for the firm to raise money by selling stock. In a world of low interest rates, and easy credit, this is not very important.