The economic slowdown in the U.S. is weighing on China. Wenzhou, Zhejiang, one of the busiest export bases in China, reported a surge of contract breaches since last year.
Beijing-based China Export & Credit Insurance Corp. (Sinosure) told Digital Business Time that the dollar value of contract breach cases filed with the agency's Wenzhou branch reached $8.79 million in the period from March 2007 to February 2008. That's a 639 percent increase over the previous year. American buyers account for 75 percent of the total.

A very common trick buyers use is decline of shipment, Sinosure said. Consumer products are more likely to encounter failure of payment than other categories.

The new trend is definitely shaking the image of export businesses.

In the meantime, Chinese exporters also suffer from the depreciating dollar. Measured in U.S. dollars, Wenzhou's exports of footwear to the U.S. grew a mere 0.3 percent in the first half, but when converted to Chinese yuan, exports are shrinking.

These problems are not unique to Wenzhou. Rather, the entire export-led Chinese economy is facing challenges.

Will China be able to weather the storm this time? As we say, don't put all your eggs in the same basket. Although no other single country will demand as many goods as the U.S. did [and still does] in any time soon [perhaps China or India will catch up one day], there are still under-tapped markets for the Chinese to explore. And don't forget about China's domestic market. I wouldn't call it under-tapped, but it certainly presents potential, especially on the higher end.