Low P/E valuation for China. Is Shanghai Composite Buy?

In last couple of days I found several articles about Chinese stocks and Shanghai Composite index as such. Most of them declared that China is undervalued and could be right time to buy. I am listing here two articles from Finance Yahoo and Tech Ticker.

The China story has only begun. Article highlights some interesting cheap Chinese stocks. Aluminum producer Aluminum Corp of China (ACH) and water supply company China Water and Drinks.

Another story about 3 Cheap China Stocks you can watch on Tech Ticker.

I still remember one year ago many analysts expected China bubble burst after Olympics. This prediction didn't match and Shanghai Composite index is already down 60% from October's high. Undoubtedly the worst world index in this period.

If I look at the valuation trailing P/E ratio is 17.2%. Even more interesting seems to be FY1 P/E ratio by dividing latest price with forecast EPS for FY1. FY1 P/E is 14. The valuation 14 for the country which still grows between 8 - 10% offers very nice discount.