4 million is a small number of people in China, and those new investors are largely trading rather small amounts of money. I was just watching this video this morning that explained it rather succinctly how the Chinese stock market doesn't hold as much influence.
The larger issue at hand is the enormous amount of private debt and the high rates on it. One theory is that the CCP was pumping the market to support these otherwise overextended companies. In a sense, they were socializing the debt rather than bailing them out directly. If this cause a crisis in consumer confidence, the fallout could actually be exacerbated by the stock market's tumble.
I've seen that theory a lot, too, and I wouldn't doubt it. They're very keen to prevent any more companies from defaulting on these large debts, but they also don't want to bail them out directly all the time, as can be seen when they let that one solar panel company default. I still don't think this crisis is going to do much to consumer confidence. Most Chinese people probably don't even have a very clear idea, and the tight media controls they've put around this event means that they weren't being exposed to the barrage of alarmism surrounding it.
"We all love anecdotes". I think the guy in the video approached the situation from a very rational and reasonable point of view. He does help put things in perspective for me. It will certainly be interesting to see how all of this plays out. The Chinese experiment with a command/market economy certainly is fascinating. Thanks for the link.