BizChina

The green shoots that some economists see peeking up through the recession may not be made of bamboo just yet.

China's economy continues to suffer, a raft of economic figures released for July reveal, but Beijing's enormous $585 billion stimulus program seems to be catalyzing spending at home.

"With the global recovery unlikely to be smooth, domestic demand is likely to remain the primary engine of growth in the remainder of 2009," Jing Ulrich, the chairman of China equities at Morgan Stanley, wrote in a research note.

China's explosive growth, as in much of Asia, has been a story about exports. But with the recession making it harder for Chinese companies to sell their goods to cash-strapped foreign buyers, the central government needed to pump money back into the economy to encourage both consumers and Chinese companies to spend more.

China Law Blog recently ran a chilling post about an executive who found himself held captive in a hotel until his company paid money it owed his kidnappers--even though his firm had declared bankruptcy. The article pointed out that holding executives until their companies pay up is not uncommon in developing countries; it advised that any business expecting to go into default get its foreign personnel out of the country first.

Is that really what happens when you don't pay a Chinese creditor? Americans used to be afraid Chinese businesses would stiff them; now it's the other way around. With thousands of American firms declaring bankruptcy, many companies in China have been left unpaid and angry. How your firm deals with your Chinese partners can make the difference between maintaining a valuable business relationship and losing out on a critical market--or worse.

Retail sales grew 0.6% in the U.S. in June. That beat expectations, but it shows how the American consumer is continuing to cut back on spending, shopping and dining out. Meanwhile China's economy remains robust, with gross domestic product growing 7.9% in the second quarter, making it a must-win market for even the largest businesses, like the restaurant company Yum! Brands, which generates a third of its revenue in China. General Motors has enjoyed a 43% increase in sales through July this year in China, year over year--even as it has gone through bankruptcy in the U.S.

Traditionally companies double-down during recessions and focus on their core target markets. This is no longer enough; they need to look for growth in developing markets like India and China, whose economies have remained buoyant. They should look especially to the women of China.

In a common Chinese bargaining tactic staged daily at markets and shopping malls, buyers usually pretend they are walking away if sellers refuse to offer a better price. The same strategy is now being used by Chinese steel mills to negotiate with tough Australian iron ore miners.

Chinese steel mills, at an impasse over ore prices with Australian suppliers, plan to turn to Brazilian suppliers instead for the iron ore imports that feed economic growth in China, China Daily reported Wednesday, quoting a shipping research house and a port operator.

According to shipping data provider AXSMarine, spot iron ore vessel bookings from Brazil to China surged to a record 39 in July after the Chinese government detained four Rio Tinto ( RTP - news - people ) employees, up from 24 bookings in the previous month. By contrast, vessel bookings from Australia's main iron ore ports to China dropped to 31 in July, the lowest level since February, and down from the 40 bookings in June.