China plunges, and it may get worse

China Daily | Reuters

A sharp drop in the Chinese stock market Friday is another negative development for the world's second-largest economy, but it may be just the start of another downturn in that nation.

The Shanghai composite closed down 5.5 percent, the worst day since the turmoil in August, on news regulators have launched probes into several brokerage firms and Chinese industrial companies' profits fell 4.6 percent in October.

This is on top of a recent sell-off in commodity prices and the latest sales numbers from construction machine maker Caterpillar, which portend a further economic slowdown in the Asian country.

Here is what Goldman Sachs and a leading Wall Street analyst of Caterpillar said...