A China Export Bubble?

The credit crisis and global economic slow down are already playing havoc on China’s exports, a critical area of its overall economy and growth. Some economists are saying current economic conditions could soon lead to flat levels of export growth in China, a condition almost unimaginable just a few months ago. In response, the Chinese government announced this week a $586 billion economic stimulus package to keep the economy moving. The package includes infrastructure projects and tax deductions for exporters, among other elements. But some are wondering whether other forces may be at work that will also reduce imports from China. The tainted milk scandal of the past few months is another in a long series of issues that have raised questions and concerns about quality and safety of Chinese products. Chinese government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year. By year’s end, more than 100,000 plants will be shuttered, experts predict.