China’s exports fell again in June, this time by 21% according to the Xinhua News Agency. The news means that goods and services being sent abroad by the world’s most populous nation are picking up only modestly since earlier this year.
China’s central government is in a race that it looks more and more likely to lose.
The country’s $585 billion stimulus package seems to be keeping consumer spending and lending at strong levels. That can only work for so long. Exports absolutely have to pick up for China to maintain its 7% GDP growth. Any sharp drop in that growth will not only cause massive unemployment; it will also burst the bubbles that have developed in the real estate and stock markets.
China is hoping to contain social unrest to its northwestern Xinjiang province. There have been labor disruptions in other cities. It is a sign that workers expect their standards of living to be maintained. That may not happen and China may have more to deal with than a slowing economy.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks