A lost decade for Chinese stocks

By Xavier Bremner

As Chinese President Hu Jintao and Premier Wen Jiabao prepare to hand over leadership to a new generation in the fall, the economic news on the mainland continues to be worrisome.

Beijing has already cut its 2012 economic growth forecast to 7.5% from 8.0%–that’s the slowest pace in 13 years. China exports are getting crushed by the economic troubles in the eurozone, where GDP shrank by 0.2% in the second quarter and isn’t expected to rebound until 2013, according to a survey of economists by Reuters. Chinese industrial profits fell 5.4% year-on-year in July, the fourth straight month of declines.

Any wonder all the bad news has weighed heavily on stocks? Bespoke Investment Group just posted a remarkable chart that shows that the Shanghai Composite Index is now trading at levels not seen since mid-2001. Chinese stocks are off 66% from the historic high set back in October 2007: