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Cramer: My REAL worry for China (it's not stocks)

Abigail Stevenson
Cramer: My REAL worry for China (it's not stocks)

The events of the Chinese stock market this week have led Jim Cramer to realize that the Communist Party has no idea what it is doing. They are making things up as they go along, and investors in the U.S. are asking too much from China .

"They aren't as clueless as our authorities were in 1929, but they do make themselves look like fools who are running things here in 1987," the "Mad Money" host said.

In Cramer's opinion, the Chinese stock market is floundering around the way the U.S. stock market did before we knew that aggressive, dynamic portfolio insurers could drive the entire market down with S&P futures.

"If the Communist Party is really stimulating, they are doing a terrible job of it," Cramer said. (Tweet This)

The real rub for Cramer is that in the world of marginal growth, China has basically been the main buyer of every raw good out there. Now it has turned into a seller, dumping everything from aluminum to steel into the world market.

The problem with China is that, unlike the United States, China was a place for emerging markets to sell goods, especially natural resources. Without Chinese demand, there will be too much of everything that involves commercial construction, notably the metals and mining equipment.

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The loss of China translates into a loss of global growth and emerging growth. The impact to the economy is felt in the ripple effects by every U.S. company that exports goods overseas.

"Look, I'm not saying we've lost China. I am saying that the real worries about China don't have much to do with its stock market," Cramer said.

Cramer thinks the weakness in the Chinese stock market is less about stocks, and more about the real economy. It is a mere reflection of the Chinese government's lack of transparency, total lack of knowledge and insight on how a stock market should actually work.

"As for the Chinese economy, it might be growing, but it is no longer responsible for the demand needed to gobble up the goods of other countries, which have relied on China's endless growth for years," Cramer said.

And that is the real problem. In a world with not enough growth, China is a massive problem that seems to be getting worse with time.

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