From Jeff Clark in Growth Stock Wire:

In a report released last Tuesday, the U.N. Conference estimated the Chinese economy would grow 7.8% this year, while the global economy is likely to decline. The obvious question here is... How does the world's leading exporter of manufactured goods grow 8% while the rest of the world stops buying manufactured goods?

It certainly can't be because the Chinese population is increasing its spending habits. Over 50 million Chinese adults are unemployed, and they're moving from the manufacturing cities back to their rural family farms. So they're unlikely to buy the $100 sneakers we here in the West like so much.

Perhaps it's because the Chinese government has committed to spending $585 billion on various infrastructure projects. As we've seen here in the U.S., massive government spending can provide a temporary boost in economic activity. But it's debatable whether there are any lasting effects.

The Chinese stock market, as represented by the Shanghai Stock Exchange Composite Index (SSEC), bottomed last November, when the Chinese government announced its plan to throw a few trillion yuan at the economy. Between then and its peak in August, the SSEC was up over 100%.

But the price action since August has been weak, and it appears reality is entering the equation. Here's the chart...

Read full article (with chart)...

More on China:

U.S. starting trade war with China

The secretive group keeping gold at $1,000

China dumping U.S. dollar for what could be the next world currency