China cutting back on commodities - trouble ahead

This is a very significant sign and not necessarily a good one for anyone. Obviously Western consumers are cutting back due to the credit crisis. This is a necessity but not a good sign for the US economy that relies on consumers shopping 24x7. Related to such cutbacks is a report from Rio Tinto (large mining corporation) that China is trimming its demand. They need to produce less, so need less, that much is easy to understand.

What is going to cause problems moving forward is China's already stressed out economy that requires adding new factories and hiring from the countryside. The growth in the economy has been thanks to ever-expanding export markets (where consumers have readily available money to buy) and money being pumped into feeding this giant factory machine. During this time China has struggled with often violent dissension in the countryside. When times are going well, it's easy enough to spread the cash around to throw at problems but it's less obvious how China will address a falling market. Less fast money and few jobs does not bode well for China's future. An unstable China is not going to be a positive development for China or the West.