China's Economy Has A Few Major Problems

China's economy is struggling with excessive debt, deflation, excess capacity, and a rapidly aging population. China continues to rely on exports to support economic growth. China has been increasingly accused of dumping its excess production in world markets. This is exacerbating trade frictions, especially with the US.

The Chinese government's efforts to stimulate domestic consumption have largely failed to achieve this goal. The problem is that Chinese consumers are depressed because many of them are experiencing a significant negative wealth effect from the losses they incurred when China's property bubble burst. The stock market has also whipsawed them. Consider the following: