Last week’s global-markets rout began with people like Wu Yizhang. The 65-year-old retiree had just taken a seat facing the trading board in his favorite Shanghai stock-trading hall on Thursday morning when he saw the market go into free fall. Panicked, Mr. Wu unloaded shares. The Shanghai market is undersized and isolated. Its market capitalization is less than one-quarter the size of New York’s. Just 37% of its shares are available to trade, and foreigners own only a tiny fraction. China’s currency is tightly controlled, and its huge banking system has relatively weak links to the rest of the world’s. Yet the tide of selling triggered by Mr. Wu and his compatriots, along with a Chinese move to weaken the yuan, rolled through stocks, commodities and currencies across the globe. The chain reaction heralds a new era for China, whose financial-market muscle has long been underdeveloped compared with its […]