Now that the holiday shopping season is upon us, there may be big trouble in little China and their exchange traded funds (ETFs). The main link between the Chinese economy and the U.S. economy is the U.S. consumer, reports Marketplace. Here is where the troubles begin: a weakening American economy may mean less work for Santa’s "Chinese elves".

U.S. consumer data is weakening and so imports from China may slow down. No doubt exports have been driving a lot of growth for China. The toy recalls may also have China on the nervous side. U.S. market trepidation is also a result of a hot Chinese market. Stocks have doubled this year and GDP is at 11.5%. Beijing wants to intervene now with interest rate hikes, and the cost of living is up – fuel, wages, and food are not cheap. In other words, not a good time for U.S. Christmas orders to take a dive.

Chinese-focused ETFs and their year-to-date performance include:

  • iShares FTSE/Xinhua China 25 Index (FXI) 87.2%
  • PowerShares Golden Dragon Halter USX China (PGJ) 77.9%
  • SPDR S&P China (GXC) 50.7% for last 3-months, having launched in March

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.