The Shanghai Composite is down over 15% in the last five weeks. And, The Wall Street Journal writes that: "Nearly one-fifth of the sold-in-China products that were studied failed to meet the country’s quality standards."
There have recently been complaints in the US of tainted pet food, toothpaste, and sea food. Taken together with China’s own assessment of its quality control and it is not hard to see the demand for Chinese products falling, at least for the time being.
But, the larger problem is China may be that the lack of quality control on pollution standards is pre-maturely killing hundreds of thousand of people each year. The FT obtained a report from the World Bank "found about 750,000 people die prematurely in China each year, mainly from air pollution in large cities." The report went on to say that the problem might lead to "social unrest".
Taken separately, the issues with product quality, falling stock markets, and acute health problems may not represent substantial cracks in the country’s economic future. But, taken as a whole, they may well spell the onset of a troubled period.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks