[quote=stockstradr]I guess my answer is that economic fundamentals will drive China’s stock markets, not the reverse.[/quote]

I have a different theory. When I look at China’s economy, the biggest issue that I have with it is its low capital efficiency:
http://www.imf.org/external/pubs/ft/wp/2007/wp0709.pdf
To make things worse, the stimulus plan China adopted after Lehman bankruptcy favors state-owned firm which have lower capital efficiency. As a result, China just needs an enormous amount of new investments to keep its engine running.
Therefore, I believe any sign of capital fleeing the country is going to predict a real crash. But Yuan has apparently stopped its appreciation after recent small move. The stock market index is appreciating. And I don’t have good enough data to tell what is happening to its property market. The Chinese banks are sitting on an enormous amount of non-performing loan, so that could drag the future investments. But so far, I still don’t have enough data to know that the investments are declining (or stop growing) in China.

So I will not make doomsday forecast as the wsj writer did…yet.