In my opinion: "no!" for several reasons:

1) Shanghai is not the main Chinese stock market. Hong Kong is the big
one and it only went down 1.8%.

2) Shanghai went down without any recognizable reason. Just a little
panic of a market which doubled in a short time.

http://deminvest.wordpress.com/2007/02/27/will-chinese-shanghai-stock...

I don't think the Chinese stock market is the only thing going wrong
right now.

then what's going wrong in your opinion?

Housing crash leaking into other parts of the economy. Troubling
inflation mixed with slowing economic growth (see latest numbers for
durable goods orders). Markets overbought by euphoric speculators. How
much further is the fall going to go? That's what I want to know,
because I am getting absolutely hammered today. Somebody say something
optimistic. I need it, brothers and sisters.

There's nothing terribly wrong.  It's just that bull run from 2003 and
the large gains since the middle of 2006 have many investors sitting
on large gains.  It makes everyone nervous & they all start talking
about how the market is due for a "correction".

So, teetering at the top, it doesn't take much to spark a sell-off.
The overnight drops in China, the sub-prime mortgage fiasco, poor
existing home sales, fears of a recession combined with early sellers
wanting to take profit before it is reduced or eliminated and you have
a recipe for a major drop.

As I write this DJIA is down 276 (2.2%) for the day.  The biggest
single day drop in over 8 months.  And the sell-off is only
accelerating as the day wears on.

Now is a good time to buy!
(Sound of chairs being thrown in my direction)
Ouch!

Don't worry: I got a few chairs and several closets thrown on me. They
don't hurt as much as yesterday's sell off did!

1)SS is the largest stock market in China in term of trading volume.
HK used to be
the largest.
2) rumors(a lot)plus profit-taking knocked 9% off SS index. Remember,
SS trippled since last year.
3)SS up 4% today
And I agree with Bigrobin. Main problem is in the US.Thanks to
Greenspan.

I read an article about the Chinese stock market being overheated.
Businessweek did a great job profiling the casino like atmosphere in
the Shanghai market.  As with any good portfolio I would recommend
diversification.  For most investors selecting the right mutual fund
is hard enough let alone the right stock, region or exchange.
http://strategiesforlife.blogspot.com/2006/09/selecting-best-mutual-f...

Sometimes it makes you wonder why the nyse reacts to some news and not
other news.  The other large growing market, India, had a large
correction about a month before China, but this went without a peep in
the states.  Sometimes it makes you wonder if the news media didn't
cause this.  Neither China nor India has a large enough market to
effect the US on their own.  The loss of liquidity mentioned as a
problem could not have been huge, as both markets dwarf in comparison
to the nyse.

Another point worth making.  The market does not move as a unit.
Though there can be general shifts one way or another, some sectors
can be going up, while others go down.   Cramer gave a good example of
this last night.  Cramer says to buy buy oil services, HAL, SLB, RIG,
etc, *complete list at www.cramersez.com*.  If you have listened to
the quarterly reports of the oil companies that have announced, they
all say the same thing, they are putting more money in to deep sea
drilling, and there are a limited number of companies who can do
this.  He said to buy before Chevron announces, except for RIG, which
he said to buy on Friday, which has options expiring which will cause
downward pressure on the stock the rest of the week.   Buy RIG Friday
afternoon, when you should be able to get it at about 75.  Good luck
all!

Another point worth making.  The market does not move as a unit.
Though there can be general shifts one way or another, some sectors
can be going up, while others go down.   Cramer gave a good example of
this last night.  Cramer says to buy buy oil services, HAL, SLB, RIG,
etc, *complete list at www.cramersez.com*.  If you have listened to
the quarterly reports of the oil companies that have announced, they
all say the same thing, they are putting more money in to deep sea
drilling, and there are a limited number of companies who can do
this.  He said to buy before Chevron announces, except for RIG, which
he said to buy on Friday, which has options expiring which will cause
downward pressure on the stock the rest of the week.   Buy RIG Friday
afternoon, when you should be able to get it at about 75.  Good luck
all!

Another point worth making.  The market does not move as a unit.
Though there can be general shifts one way or another, some sectors
can be going up, while others go down.   Cramer gave a good example of
this last night.  Cramer says to buy buy oil services, HAL, SLB, RIG,
etc, *complete list at www.cramersez.com*.  If you have listened to
the quarterly reports of the oil companies that have announced, they
all say the same thing, they are putting more money in to deep sea
drilling, and there are a limited number of companies who can do
this.  He said to buy before Chevron announces, except for RIG, which
he said to buy on Friday, which has options expiring which will cause
downward pressure on the stock the rest of the week.   Buy RIG Friday
afternoon, when you should be able to get it at about 75.  Good luck
all!