I'll post some quotes from "The Australian Business Review"

"Commodities in a meltdown, but coal, uranium offer some hope "

"Copper has hit a six-year low"

"Nickel took another hit, ending at $US11,255/tonne while lead shed more value to close at $US1716/tonne."

"Aluminium continues to weaken. ANZ says demand in Europe has failed to pick up, underlying Chinese demand is weak"

Admittedly Australia is just the mining division of China so its hard not to expect them to crash. Still, Australia has been in an impressive housing bubble at least three times over trendline because China only grows and exports to China only grow, well, at least they only and always grow until they don't. That'll have some impact on financials in Australia and then the world.

Nickel, for example, used to be pretty stable, almost "boring" in the 90s and before. Then it tripled in the boom, and has collapsed since then but is still about twice over trendline. This is interesting to think about technologically, imagine the price of NiMH batteries has been 3x trendline for the last couple years and "should eventually" drop to about a third of present price. Of course its little consolation that hybrid cars will be cheaper if you're unemployed because the economy crashed, but "someday" hybrid battery packs will only cost a couple hundred bucks. We might all be standing in church soup lines for food, but at least hybrid batteries will be cheap.

The China market is pretty limited in reach; not many foreigners and not even many institutional investors; it is rife with insider trading and is pretty volatile. It is more like Macau than wall street. Still, dysfunctionalities in the Chinese economy that they were trying to hide with a stock market boom will now come in front and center, which will have some effect on the global economy. Especially in raw materials and energy, but even in some trade.

I'm quite worried about it personally.

A widespread slowdown in China's economy would have major impacts on the rest of the world, but it's important to remember that the stock market is not the economy (just an imperfect measuring device). The stock markets in China have been very bubbly lately.

My (admittedly limited) understanding is that most economists are still expecting significant growth in China this year, though not as strong as previous years.

Also, the recent financial crisis in the US was partially/mostly driven by a debt crisis (housing/mortgage issues), which historically has had far larger and longer-term impacts than a stock market crash/correction.

If it results in a contraction of the real Chinese economy then resource exporting countries (Brazil, South Africa and Australia spring to mind) would feel some serious pain. I'm not sure how much of an effect it would have on the US and Europe.