Given the strength of the Yuan and the fact that China still grew by 10.6% the first quarter I think we have more to worry about here.

Real estate is far from played out, and even if China doesn’t sell of their less and less valuable US bonds, they’re still growing and we aren’t.

I think their weakness was spillover from ours, in a year they’ll be higher and we’ll be lucky to be where we are today. Why? China is becoming less and less dependent on US consumption, at some point they will sell their bonds, a lot of their speculation was from the US (most emerging market funds were up ~25% last year). As things deteriorate here further, (if you agree today is not the sign of a turn-around) China will continue to grow and attract further investment. We’re nowhere near reversing our trade deficit with them and they may see a correction in RE, but China’s dependence on us is weakening.