The extent of the Chinese share market collapse is now testing the ability of Beijing to moderate the "invisible hand of the market" by the "visible hand of Government".
Chinese regulators yesterday blamed "panic sentiment" and "irrational sell-offs" for the plunging share markets which have led to trading halts being called on nearly 3000 companies.
But the more fundamental question is whether it is rational to expect Chinese Government measures - like suspending IPOs and making it easier for investors to meet margin calls - will bring an end to the current instability.
The market reaction has posed a major challenge for President Xi Jinping. When questioned on whether the Chinese Government could work the switch to a more true free market environment without ensuing chaos, Xi has expressed confidence in his Government's visible hand to moderate the market's invisible one.
The concern now is that Beijing's inability to quell the restive market could spill over into wider financial and domestic political risks.
Commodity markets are also being affected.
This will be of concern to Finance Minister Bill English who is poised to begin a visit to China. English was in Beijing recently for the signing ceremony to launch the China-led Asian Infrastructure Investment Bank.
English and Treasury Secretary Gabriel Makhlouf, who is also on the trip, will be aware that if the instability spills over it could also impact on the NZ economy.
The Chinese Government is a significant buyer of NZ Government bonds.
But more importantly China has hoovered up many of NZ's agricultural exports and is the source of a great deal of our tourist trade.
If the turmoil knocks domestic confidence and with it internal domestic demand there will be a spillover effect.