If investors think the U.S. stock market is bad, they should take a look at the pain that market players are feeling across the pond.

China’s stock market is down 60% so far in 2008. That is an enormous loss compared with the U.S. stock market, which is down 36% when measured by the performance in the Dow Jones Industrial Average.

Chinese officials aren’t oblivious to the losses being felt by local and foreign investors in their equities markets. On Monday, The People’s Bank of China said it will cut the one-year yuan lending rate to 5.31% from 5.58% and the one-year yuan deposit rate to 2.25% from 2.52%.

China also announced it will reduce the amount banks must set aside as reserves by 50 basis points. These developments come on the heels of China’s biggest rate cut in 11 years, which was announced just four weeks ago.

These actions continue to show how serious China is about avoiding any more economic pain or civil unrest, which are big fears of many outside observers. By slashing its interest rates and encouraging banks to start lending, China hopes to spur business activity and avoid further layoffs for its workforce.

Fear in China’s stock market is high, as evident by the huge declines in the region. As the old Wall Street adage goes, the time to buy is when blood is running through the streets.

One place an investor can turn to to find stock ideas for playing China is TheStreet.com’s “China Watch” video series. The “China Watch” videos concentrate on finding viewers the best plays for investing in China with a combination of research and opinions from industry experts.

Market players can also visit TheStreet.com and RealMoney.com to find great articles and opinions on China from some of the best minds on Wall Street.

Below are some highlights from some recent China-related videos at the TheStreet.com and other sources.

Jim Cramer believes China will be the first major economy to turn. On Monday’s "Cramer: Why China Is Key" video segment, he told viewers that he is buying stocks for his Action Alert PLUS Portfolio that will benefit due to China’s urgency to save its economy and avoid civil unrest.

He explained that China needs more capacity but that it actually has demand to meet it. Plus, China’s huge stimulus plan is equal to 20% of its GDP, much higher than any other country's. Cramer says signs of a bottom in China can be seen with the action in copper and the Baltic Dry Index. Some great pure plays on China include iShares FTSE/Xinhua China 25 Index ETF (FXI) and the China Fund (CHN). Check out the China Watch Portfolio to discover some other ways to play a China rebound.

Prices for high-end cars in Beijing are dropping faster than temperatures across the Midwest. On Monday’s "Luxury Car Prices: Slashed in Beijing" video segment, a CCTV.com anchor said that the price of the 2008 Audi A6 2.8 sedan has fallen around 80,000 yuan from last month.

The prices of other luxury cars such as Porsche, BMW, Mercedes-Benz, Hummer and Land Rover are already 20,000 yuan to 30,000 yuan cheaper as dealers in Beijing face pressure to hit their annual sales goals. Despite the weakness in the luxury market, sales of compact cars are up nearly 11% for the first 11 months of 2008.

Luxury car makers such as Daimler (DAI), General Motors (GM) and Tata Motors (TTM) could be affected by this news. Check out the China Watch Portfolio to see who else could be hurt.

Is now the time to scoop up shares of beaten-down Chinese search engine Baidu.com (BIDU)? On last Wednesday’s "China Watch: Baidu Not for the Queasy" video segment, RealMoney.com contributor David Sterman said that investors are selling shares of Baidu.com because of the weak Chinese economy and the lack of demand for Internet advertising.

Despite the near-term economic weakness, Sterman believes the opportunity for Baidu.com in the long-term is outstanding because China’s middle class could grow to 200 million to 300 million. He says the stock could rebound to $250 a share when things return to normal.

Investors might want to take a look at some other Chinese advertising plays, such as VisionChina Media (VISN), Focus Media (FMCN) and AirMedia Group (AMCN). For more ideas on the Chinese advertising/Internet sector, check out the China Watch Portfolio.

China is experiencing huge growth in the health care/pharmaceutical sector, and some global health care giants are eying the Far East for opportunity. On last Friday’s "China Watch: Healthy Healthcare" video segment, Paul Boni, chief research officer for Grail Research, explained that more people are getting health insurance in China and that the country’s goal is to have 100% coverage by 2020.

He mentioned that Onyx Pharmaceuticals (ONXX) and Bayer (BAYRY) are partners on liver cancer drug Nexavar and plan to launch the premium-priced product in China soon. He says analysts are watching this launch closely to see what kind of pricing the companies get and what kind of uptake occurs.

Boni also pointed out that Eli Lily’s (LLY) China growth is 25% and Novo Nordisk’s (NVO) is 35% and that Sanofi-Aventis (SNY) says China is its fifth-largest market. To learn more about which health care companies are moving into china, check out the China Watch Portfolio.

Investors who want answers on how to play China can submit questions to the “China Watch Weekend Mail Bag.” On last Saturday’s "China Watch Mail Bag: 1 Billion Consumers" video segment, a viewer asked: “The health of the Chinese consumer seems much stronger than that of the American these days. What is the post-Olympics retail scene in China these days as we edge closer to the holidays?”

The Talented Blonde, Kristin Bentz, said that the Chinese retail scene has slowed down quite a bit due to the global recession. However, she explained, China’s slowest times are still better than the U.S.'s because of China's size and growth. Bentz favors retail plays in China such as Nike (NKE) and Tiffany (TIF). Check out the China Watch Portfolio to see which other retail companies could be winners in China.

Posted on Dec. 23, 2008