"Over the past six months, the stock market has been a very cheap and easy place to raise money since companies have enjoyed having twice the share price valuation they had previously without generating any additional revenues or profits."

One way the stock market falls could have an effect on the economy is if there is a wealth effect on consumption.

Some 70 percent of those who invest on the China exchanges are private individuals, which is in marked contrast to exchanges in London and New York, which are dominated by institutional investors.

Millions have invested small fortunes, hoping for quick returns, and in recent days many of these will have been feeling a lot poorer and therefore less likely to want to spend.

Yet despite this frenzy, only 6.8 percent of urban households in China have stock accounts and 70 percent of these accounts had less than 100,000 yuan in them.

Oliver Barron, head of the China office of NSBO, which provides research on the Chinese economy, says there has to be a sense of proportion about recent events.

"The declines in share values do not necessarily mean the destruction of wealth for all households," he says.

"It will surely dent consumer confidence and may have a notable impact on retail sales in July and August but the impact is unlikely to be lasting."

Kowalczyk, however, thinks there could be some impact on consumption, which could ultimately impact on growth.

"If you look at the second quarter data, consumption accelerated quite sharply and was one of the key reasons why growth overall was quite stable. There is a risk that this could be undermined by the negative wealth effect from the stock market."

If the stock market volatility was to impact both on consumption and the contribution of a buoyant financial services sector, then the government might be forced again to hit the investment lever and pour money into infrastructure investment to achieve its growth target.

The risk would be further increases in local government debt, which is seen as one of the key weaknesses of the economy.

It was revealed on July 24 that local government debt had risen to 30.28 trillion yuan at the end of 2014 from 17 trillion yuan in the middle of 2013 when the Chinese Academy of Social Sciences published the government's balance sheet.

So far from having a minimal effect on the economy, the stock market volatility could effectively mean the government putting on hold its still nascent attempts to rebalance the economy away from investment to being more consumption-led on hold.

"Sure, there is a real risk of that," adds Kowalczyk. "If this were the case then there would be major implications to what is currently happening with the markets."

For Zhu at the Shanghai Advanced Institute of Finance, this presents a persuasive case for the government to be more relaxed about the growth target.