Gary North

May 21, 2010

The Shanghai composite stock index reflects investors' hopes for China's economy. It reflects a roller coaster. The wild swings reveal pessimism and optimism.

Pessimism has returned. The latest figure for May is lower than the bottom of the fall in early September of 2009.

This is from Yahoo's finance site.

This chart reveals escalating worry. I think it is worry about the possible popping of China's real estate bubble. This would have fall-out all over urban China. The government's attempt in 2009 to switch from an export-driven economy to a stimulus-driven domestic economy would hit a brick wall. Consumer demand would tank.