I think hysteria would be warranted if the Chinese government were to take a Schumpeter/Hayek/Mellon liquidationist response to the collapse of the market bubble (see the US/Europe circa 1929). Why yes then you would have contagion spreading out into the real economy and a long depression.

I'm thinking not. Instead I the Chinese central bank will inject liquidity again, much to the horror of the WSJ Editorial board who will again sternly warn that such actions, mark their words! come to an bad end!

snort