&gt; My suspicion is that they will follow the US example and throw billions at the banks in an attempt to right them.<p>My suspicion is that China will actually let a few banks fail before the government steps in. And China culturally prefers to find scapegoats - it&#x27;s easier to say the bad action taken by a company is not reflective of the company, but the result of a few criminals who betrayed the rest of the company for personal gain (this rationale is often used in government corruption cases).<p>In any case, if they let a bank or two fail, then anger about economic losses is redirected away from the government and towards the corrupt, greedy bankers, and the government is the knight in shining armor that comes and heroically saves the day. The US did the exact same thing with Lehmann - they found the bank that was more fucked than the rest, let them fail in a controlled manner, and it sent a signal to the market that &quot;this is serious, equity will be wiped out, but it&#x27;s not financial Armageddon&quot;. I expect China to send the same signals.