The hype around China is seductive, especially when we're mired in a recession. Any ray of hope is worth a few minutes of our time. Even a turning economy isn't enough ... it hasn't turned yet! So, we have the promise of China.

Well, China is about to learn about the downside of capitalism. A bear market could be threatening the country, driving home the notion that free markets (even if only slightly free) involve some risk, and proving to the American public that inside every sure thing is a hefty dose of "flavor of the month." The bears are circling Shanghai, even as the U.S. equity market appears to be coming back.

The Shanghai Composite is up 210% during the last year. Obviously, it is not a bad place for a company to list its stock. All the shares have to do is keep up with the index and everyone should be happy.

China's second largest bank, China Construction Bank, sees things that way. It will list on the Shanghai Stock Exchange, perhaps as early as this month. The financial company wants to raise $7.8 billion.

The bank already trades in Hong Kong, but "of the 44 shares that are listed on both the mainland and Hong Kong, the Shanghai shares trade at 46% premium to their Hong Kong counterparts," according to a report on MarketWatch. That does not make much sense, but its is certainly an incentive for Chinese stocks listed on the Hong Kong Hang Seng to list in Shanghai as well.

At some point IPOs of this size may be a challenge in China. The liquidity may not be there to fund them. But, right now, that days seems a long way off.