When it comes to bear-market rallies, the U.S. has nothing on China.

Shares in Shanghai roared overnight, gaining 7.6% to 2523.28, the largest one-day percentage gain in four months. Unless the gains are related to the surprising performance by Chinese athletes at the Beijing Olympics, the rally was founded on little more than chatter revolving around potential stimulus packages and steps by the government to shore up the stock market, which has fallen 60% since peaking at an intraday high of 6124.04 on Oct. 16, 2007.

Fluctuations in developing markets are often greater than in developed markets such as the U.S., and investors, by and large, suggest treading lightly around volatile moves such as the one experienced in China. The index is still lower for the month of August, and the low volume suggests this rally isn’t likely to have staying power.

“Maybe this thing goes up another 10% to 15%, but I’d still call it a dead-cat bounce,” says Ken Winans, president of Winans International in San Francisco. “The market was oversold, but it’s very bearish.”

Besides, the reasoning behind the rally strains credulity. Chinese officials had notably been focused on slowing the torrid pace of economic growth in the country to head off domestic inflation, so such a turnaround in policy “doesn’t make a whole lot of sense on the surface,” says Malcolm Polley, chief investment officer at Stewart Capital Advisors.

The lack of confidence that such a program will get underway was underscored by the mild selloffs in Japan and Korea, which would presumably benefit from increased economic growth in China.

Furthermore, in developing economies, particularly one such as China, which is slowly becoming more liberalized, bear markets have a way of producing more intervention from the government. Mr. Winans fears that could come in the form of capital controls, limits on short-selling, or other investment restrictions that could dampen investor interest in the country, at least for a time.

“This government has not seen a serious bear market before,” he says. “Will they let it act normally or are they going to try to interfere with it?”