I don't think that qualifies as market manipulation. It might qualify as some sort of defamation if it proves to be false. That would set them up for massive lawsuits from the company and investors.

I only read a small portion of the report, but it's obvious they are pretty sure of themselves, so unless they are pulling a scam themselves, I'd tend to believe they are right. Something similar happened to Timminco - a short seller put out a detailed negative report and proved to be right (although the stock went higher for a while, so he might have been burnt).

Of course, this does not directly effect the other Chinese companies, but what can you do? Ink splatters...