The Shanghai Composite Stock Index has plunged 38 percent since June 12, and the rout isn't over yet, experts sayTop strategists and money managers expect the drop to continue to about 2,700 for the index, according to Barron's. That's down 15.8 percent from Monday's close of 3,206.Price-earnings ratios don't look pretty for Chinese stocks, notes Barron's writer Daniel Shane. The Shanghai index carries a P-E of 15. While that represents a steep decline from June's high of about 22, it's 50 percent higher than a year ago, when it totaled 10.The 2,700 level for the Shanghai Composite would represent a return to 10 for the P-E ratio.Some say the index could well drop further than that level. “I’m sure there were plenty of analysts a week ago telling you the floor was 3,500,” Michael Parker, a Sanford Bernstein strategist, told Barron's.Fundamentals aren't so hot for Chinese stocks, with economic growth slumping. Official figures put growth at 7 percent, conveniently matching the government's target. But private economists peg growth at just 3 to 5 percent.The government devalued the yuan two weeks ago, pushing it down 3 percent, and has significantly eased monetary policy to prevent an economic downturn.Parker says that for China stocks to bottom, there needs to be evidence of more effective policy making from Beijing than we’ve currently seen. “The risk is they’ll do something draconian on the currency side,” Parker says.All that raises a major trust issue for China's government."Views about China’s economic prospects appear to be shifting from serious concern to near panic," Eswar Prasad, a Cornell University economist who formerly headed the IMF's China division, told The Wall Street Journal.Some U.S. commentators sounded a note of panic earlier this year about the potential for China's economy to exceed the United States in size. But now things look a little different.“The world is starting to realize China is not nearly as competent as thought, especially in the economic sphere where everyone gave it good grades,” Fraser Howie, co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise,” told The Journal.