Troubling news indeed. China could be facing some changes down the road.

You're right about Australian property prices.

Grrrr.

"China’s securities regulator banned major shareholders, corporate executives and directors from selling any of their stakes for six months" - Bloomberg.

IPOs halted, banned from talking about negative news, false information spreading regarding international conspiracies, central bank is "providing liquidity" to buy stocks, property is now allowed as collateral, interest rates cut, rules relaxed on margin trading.

And they still kept bleeding.

Now that they've banned big players from selling, it's not a market at all. Beijing has killed any reputation it had in the financial world. Kissed "RMB world reserve currency" good bye. You're not even allowed to sell stocks you own.

As an european, i find this news more troubling then anything to do with Greece.

Yesterday Chinese president was visiting Russia (Ufa) for BRICS meeting. He looked quite confident and calm, called Mr Putin his 'old friend'. Mr Putin agreed that any problems we'll meet we'll overcome together.
I'd not bother much about Chinese old people's money. I'd care about money of American/European investment funds, which were robbed once again... People never learn.

 If you see the chart, you can see that the stocks still haven't dropped below what they were at the start of 2015. What this means is that investment funds won't have lost much money, as they would have longstanding positions in stocks, from before 2015, and by now they'll have sold out of those stocks anyway. Those who are losing/have lost money are those who got in late to the market, and those that for some reason haven't sold out. Aka primarily chinese old people...

And if everything is so nice and Dandy, why have they started QE, basically shut down the market, etc. to stop this?

Well, they have a problem - they dealing with it. Thats normal. 
As for myth of 'chinese old people'... 3 TRILLION USD, Karl!
Even IF 100 milion chinese people put their all thir savings of, say, 1000 USD (savings amongst average people can't be high. Its still a LOT of poor people in China) into the stock exchange it will be just (heh!) 100 billion USD. 1/30 part of the money lost... So Who's lost the rest?
And tbh I don't believe that ALL old people will suddenly start putting their money into stock market. Some part of the city population? Yes. Country China? No way...

Chinese companies which have invested in stocks will lose money.

Only 1000$ per citizen When you're talking about the richest 10%? Really? I get that a large part of China's population is poor, but those aren't the ones who invest. And like I said, EU/US funds have lost money compared to what they had at the start of June, but given that they would've had long term positions, they've still made money on chinese stocks compared to, say, June 2014.

If I invested 1 million in stocks, and it tripled in value by a year, then it tumbled in value by a million within a month after that so that the value then was at 2 million, you would say "Hah, you lost 1 million in a month!" but I would say "hah, I made 1 million in a year and one month!"

Those funds have made money (on chinese stocks) with a 12 month perspective, they've lost money with a 1 month perspective. For those chinesevpeople who got in late though, they don't have a 1 year perspective because they hadn't invested one year ago. They have lost money period, the funds have lost money, but they have lost less than they have made...

went to china for about 10 days in January of this year. When I returned I told all of my friends to pull out of Chinese investments.

Not only is their stock market inflated by government manipulation, but their entire economy is. I walk through a beautiful city there (Guangzhou) with a skyline as impressive as LA or Chicago. Reality hit when I went out in the evening to discover it was a ghost town. They built all of that stuff just to build it, no future return to be had there (any time soon). It benefits their GDP because it created jobs, but they cant just keep building forever at some point what they build has to generate return.

Indeed, the big danger about this stock market crash would be if it made the obvious real estate bubble to burst as well. That's a much bigger bubble than this stock bubble. Actually this collapse had some pretty obvious signs showing it was inbound, but the chinese gov hid those signs, and still do, for the chinese who invested there.