In the following video, Fool contributor Dan Caplinger discusses how, even as the Dow Jones Industrials have climbed to record highs lately, stock markets in China have lagged behind. That's largely because of rising inflationary pressures in the emerging nation, with higher food costs filtering down to push consumer prices up 3.2% over the past 12 months. Further gains could force the Chinese central bank to tighten monetary policy, potentially hurting business activity.

Dan takes a look at three companies that are particularly vulnerable to a slowing Chinese economy. If China can't get inflation under control, these companies could be the worst hit from the fallout.


Caterpillar does a lot of business in China, so will it be affected if the emerging market starts to falter? Find out in our premium research report on the construction-equipment giant, in which top Fool analysts look at whether Caterpillar can keep growing even in a slow economic recovery. Just click here to access it now.

The article Is China Holding Back the Dow? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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