Big Trouble for China's Top Trade Partner

Practically every week, some Wall Street expert or financial commentator predicts China's imminent economic collapse. And with China's newest trade numbers coming in shockingly weak, the talking heads are having a field day with this news.

Long-time readers of this column know my enthusiasm for China's long-term growth hasn't wavered. However, you must invest based on what you believe, and in what makes sense for your investing time frame.

And so, if you think I'm nuts and that China is a train wreck waiting to happen, especially here in the short term, it's easy to bet against China.

In fact, one very good way is to bet against China's biggest trading partners.

Let's look at some of the biggest losers ... and one in particular that could turn into a big winner for those who want to bet against it!

The Chinese economy grew at a 7.5% annualized rate in the second quarter, according to the most recent numbers. While this is a far cry from the 10%-plus growth China enjoyed in recent years, 7.5% is still a robust number.

However, exports fell by -3.1% on a year-over-year basis, missing the expected 3.7% gain. That's almost a 7% swing!

While most of my peers focused on the export numbers, what caught my attention was an equally dramatic -0.7% drop in imports. That's a HUGE disappointment for analysts who expected a 6% increase.

This means business is dropping off for companies and countries that sell to China. This is a great opportunity to make contrarian bets on the biggest losers.

Who are the Biggest Losers?

You can look at China's neighbors for candidates. The big four are Thailand, Indonesia, Malaysia and Australia.

(Click the image to view it full-size.)

Resource-rich Australia is particularly vulnerable to any slowdown in China. A whopping 45% of the country's exports go to China. China is Australia's No. 1 trading partner.

China just isn't buying as much of Australia's natural resources as it once bought.

Iron ore is Australia's No. 1 export and China just isn't buying as much as it used to. That may explain why iron ore spot prices plunged 30% between February and May of this year.

You know things are bad when industry insiders start using terms like "plague" to describe business conditions!

Australia sees what this means for its own economy. The Reserve Bank of Australia recently lowered its 2013 growth forecast from 3.0% to 2.5%.

If you wanted to bet against the Australian economy, I've prepared a free video explaining several ways to do so. I think you'll find it well-worth your time.

You'll want to watch right away, though, because its central bank is meeting today and the outcome could be market-moving! Click here now so you're not caught off-guard!

Best wishes,


P.S. I've just discovered a ticking time bomb in the markets ... one that could set off the worst dollar crisis since 2008. But for investors, it is already generating quick, windfall gains.

My subscribers have already seen the opportunity to earn a 23% gain and a 43% gain off this impending crisis ... and I think there are plenty more where those came from. Find out how you can get in on the next round of potential gains — click here now.

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Posted 08-09-2013 1:29 PM by Tony Sagami
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