China Stocks to Watch This Week

If investors think the U.S. stock market is bad, they should take a look at the pain that market players are feeling across the pond.

China's stock market is down 60% so far in 2008. That is an enormous loss compared with the U.S. stock market, which is down 36% when measured by the performance in the Dow Jones Industrial Average.

Chinese officials aren't oblivious to the losses being felt by local and foreign investors in their equities markets. On Monday, The People's Bank of China said it will cut the one-year yuan lending rate to 5.31% from 5.58% and the one-year yuan deposit rate to 2.25% from 2.52%.

China also announced it will reduce the amount banks must set aside as reserves by 50 basis points. These developments come on the heels of China's biggest rate cut in 11 years, which was announced just four weeks ago.

These actions continue to show how serious China is about avoiding any more economic pain or civil unrest, which are big fears of many outside observers. By slashing its interest rates and encouraging banks to start lending, China hopes to spur business activity and avoid further layoffs for its workforce.

Fear in China's stock market is high, as evident by the huge declines in the region. As the old Wall Street adage goes, the time to buy is when blood is running through the streets.

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