I think I figured out what is going on with Chinese convertible bonds. The standard way of modeling convertible bonds is as a bond with a American call option. Given this model it makes no sense to not convert the bond when the stock price goes over the conversion price.

But that's not what is going on in Shanghai.

What is happening is that traders are using convertible bonds as stocks with a put option because put options are not available for stocks on the Shanghai exchange. If the exercise the conversion option then they lose the put option.

I'm going to run the numbers for convertible bonds in the next week or so. What I am willing to bet from the graph of Minsheng Bank is that 1) this model explains the general trend of the value of the CB and 2) there are huge arbitrage opportunities available. Looking at the graph of Minsheng Bank there is a trend and then a lot of fluctuations around that trend which I think reflect that fact that no one has put this information into a quant model and done arbitrage.