NEW YORK ( TheStreet) -- Chinese data for September have been a mixed bag, but domestic policy has induced a panic sell in Chinese equities.The chart below is of iShares FTSE China 25 Index ( FXI). Chinese PMI numbers released Wednesday were the best in seven months. The data, however, couldn't overcome the negative sentiment surrounding rising short-term rates. The Chinese seven-day repo rate rose to around 5% on Thursday, its largest move since earlier this year. That rates have climbed so much signals to investors that the People's Bank of China fully intends on tightening monetary policy. CAT) suggests industrial production won't be that great in the fourth quarter. Equity investors have been looking for a correction lower in global markets all year, and China seems to be the first piece to crack. Although other developed economies may not correct lower as drastically as China has, look for negative sentiment surrounding the region to weigh down a bullish thesis for the fourth quarter.