Could China's GDP Decline?

This is a pretty far out title. Many times in the markets I take a contrarian position. At times it looks like the dumbest call on the planet. Often I am wrong. It goes with the territory of being a contrarian. However when my contrarian view is correct often the position goes in my favor by a large amount.

Back to this title about China's economic output actually dropping. This is such a contrarian view point that I have not heard it - any where. Nobody thinks this could happen. But if the facts are examined closely even though it is an unlikely scenario it may not be as unlikely as people think. First let's look at the stock market. The Shanghai index has been clocked losing at least 35% from the top. The stock market is considered by some to be a leading indicator. Is it saying that China's growth will slow down sharply? Not necessarily but at least it is something to think about. What about the theory that a country that is growing so fast can't fall into recession. Well that doesn't hold much water since the US in the late 1800s and early 1900s had a very fast growing economy whose output was derailed a number of times as recessions ensued. If the US in its hyper - growth spurt a hundred years ago could fall into a recession, couldn't China? The Chinese currency (the Yuan or Remnimbi, not sure why there are two names but there are) has been appreciating as the Chinese authorities try to curb inflation. This is starting to hit the Chinese exporters. Lastly the US economy is rapidly falling deeper into recession. As a consequence the US consumer is pulling back sharply. The US consumer (according to Fred Hickey in Barron's in the Round Table) is about 19% of world GDP. A large portion of China's GDP is exports to the US consumer. Doesn't that mean that China is feeling the pull back too?

China falling into a recession is unlikely. I went through this thought process though to show that although unlikely it is not as unlikely as most believe. China go into recession? What would Jimmy Rogers do? He just packed his bags left New York and moved to China. He could always come back.