Chinese Taking Market Jitters In Stride

U.S. investors will be holding their breath when the stock market opens Monday. Last week's Wall Street plunge was triggered by a drop of almost 7% on the Shanghai exchange.

The Chinese are new to investing and that could be a problem. As CBS News correspondent Barry Petersen reports, some are finding it addictive.

Capitalism doesn't get better than investors hanging out at the local stock brokerage offices that dot China, and they're savvy enough to take stock market gyrations in stride.

"It's not risky to me the economical climate is so good currently, where does the risk come from?" one man said.

Another said, "Chinese stock holders are different from the capitalist countries, they have faith that they can't lose in the stock market."

And in booming China, the Shanghai stock market has been a great bet. It went up 130 percent in 2006. That's why the country is seeing as many as 90,000 new stock accounts opened daily, inspired by another of capitalisms well known traits: greed.

"We've got people in China who have actually been going to pawn shops and pawning their houses. They're taking out money from their credit cards. They're pouring it into the Chinese stock market," said Professor Peter Navarro of the University of California.

Still experts in China were surprised when the Dow tumbled this past week after a bad day on the relatively small, highly speculative Shanghai market.

"I don't think the market is a great place to look if you want to get signals of what's happening in China... not yet," said Professor Michael Pettis of the Tsinghau Univesity in Beijing. "In a few years it may become so."

Shanghai's market rebounded fast because China's economy is still growing at a staggering rate.

China is growing so fast it is well on the way to overtaking Japan as the world's second largest economy.

And that growth is helping China become a kind of economic crutch for the American economy.

With a roughly $200 billion budget deficit and a world trade deficit of $760 billion, America is living beyond its means.

Enter China, think of it as our national credit card. They've loaned Uncle Sam, by way of buying our treasury bills, some $700 billion so far.

Continuing American deficits will mean borrowing even more from China – which is exactly what China is banking on.