Under my guidance, many of my New World Investor subscribers sold their Chinese stocks last year. Good thing since China is down about 46% this year. It is one of the two worst performers among the world's two largest stock markets (India is the worst).

Though I'm certainly not ready to go back in just yet things are starting to look up a little for China. The U.S. recession is biting into Chinese exports. At the same time, Beijing just began a massive shutdown to clear their polluted air before the Olympics. Half of the vehicles are off the roads under odd day/even day driving rules. About 300,000 heavy polluting, aging industrial trucks, many of which operate only at night, were completely banned for the duration. Many highly polluting factories have been shut, and the chemical plants, foundries and power plants left open have to cut emissions by 30%. The only practical way to do that is to shut down for 30% of the time. All dust-creating construction in Beijing itself has been shut down.

I still think we'll see some pea-soup air during the Olympics. I remember landing in Xian at about 11 a.m. on my last trip and it looked like dusk. The pilot advised us to hold a handkerchief over our mouths and noses while we walked across the tarmac from the plane to the terminal. More important, these extraordinary, drastic measures are sure to hurt GDP and corporate earnings in the current quarter. The central government may or may not implement the rumored crackdown after the Olympics are over, but I think we can wait for a while before jumping back into.