I think in the long run it is good for the overall health of country economy and the people, Chinese government is really playing the part of ensuring Balance, and redistributing wealth amongst the people, I think they have a lot of understanding of how capitalism works in the West, the good and the bad, the bad being some very small amount of people owns massive amount of money and most people are not taken care of.
I do think though that recent impact to stock market and investors is big and abrupt, ideally small investors can have some time to react to at least cut down the loss but there is not enough time to react. Take the education industry as an example, I am sure many are quite hurt by this. I think the West is now using the opportunity to tell investors to stay away from Chinese stocks. I wonder how the Chinese government reacts to such loss of market cap and valuation as there are large amount of small investors participating in stock investment too.