China’s stock market, measured by the Shanghai Composite Index, fell 19.7% from August 4 to August 19—narrowly avoiding the 20% decline often referred to as the threshold for a bear market. After climbing more than 100% during the nine months since the low on November 4, 2008, a 20% pullback is not all that alarming or surprising, and the index regained one quarter of the decline late last week as it rebounded off of a key technicallevel. However, the volatility in the Chinese stock market raises a question about the potential volatility in the underlying Chinese Economy after an explosive 16% GDP growth rate in the second quarter and the resulting impact of a potential Chinese economic slowdown on emerging market stocks and commodity prices.

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