The China Miracle looks to be in deep trouble in the stock market, just as I forecast, but I do expect them to rally back with the U.S. market to new highs after the Beijing Summer Olympics. Look at these recent IPO catastrophes:

Xinyuan Real Estate (XIN): IPO date was December 11, with the price at $14. As of January 16, the price was at $9.90 -- -29% loss.

ChinaEdu (CEDU): IPO date was December 10, with price at $10. As of January 16, the price was at $6.85 -- a -32% loss.

China Nepstar Chain Drug (NPD): IPO date was November 8, with the price at $16.20. As of January 16, the prce was at $13.94 -- a -14% loss.

Giant Interactive (GA): IPO date was October 31, with a price at $15.50. As of January 16, the price was at $11.44 -- a -26% loss.

Earlier Chinese IPOs, like Xinhua Finance Media (XFML) and Noah Education (NED), that went public earlier in 2007 have seen their stocks cut in half.

But China keeps growing, with 11.2% growth just reported for the fourth quarter. That's the fastest growth in 13 years, and the government is putting in price controls to stop inflation, which is also at the fastest rate in 13 years. Yet they continue to print money like crazy, trying to keep up with Helicopter Ben so that the yuan doesn't rise too quickly against the dollar. It's a very volatile situation, and if there is a serious recession in the U.S., the Chinese market will blow up. But I don't see a recession in the U.S. yet, just very slow growth for a couple of quarters, and in that environment the country can hold it together through the Olympics. But I would not be surprised to see the U.S. market substantially outperform China from the opening of the Olympics through an April 2009 top.