American businesses are setting up shop in Mexico instead of China. China, which was the number one location for manufacture of goods bound for the U.S., has fallen into third place. Mexico is now number one, followed by India.

Several factors have converged to make Mexico an attractive place for manufacture. Daniel Silva of the Mission Economic Development Authority said: "Compared to China, Mexico offers better access to North American markets with a shorter, faster and cheaper transportation route to move products and supplies by truck, rather than over thousands of miles by ship, rail and truck combined."

It all started when President Obama, under pressure from U.S. unions, slapped a 35% tariff on tire imports from China. This move angered Beijing to no end, and to the point that China is challenging the action with the World Trade Organization.

China, in retaliation, has said that it would launch an "antidumping" policy against U.S. car exports to China. U.S. car makers export only about 9,000 vehicles to China at present. However, China is now the leading auto maker in the world, and barring U.S. imports would hamper the U.S. auto export market.

Baidu (NASDAQ: BIDU), China's leading search engine, sold off during Monday's after-hours session after the earnings report for the third quarter was issued. When you're a theoretical growth company like Baidu, missing estimates on the guidance side is never a good thing to do.

Nevertheless, Baidu delivered in Q3 itself. Sales skyrocketed 39%. Net income per share exploded over 40% to the upside, coming in at $2.07 per share on a GAAP basis. Adjusting for items, the company earned $2.16 per share. Earnings.com gives an expectation of $1.81 for per-share profit.

Soft drink giant Coca-Cola Co. (NYSE: KO) reported its third quarter numbers this morning, and managed to beat out analyst estimates, but shares are still selling off in early morning trading.

The reason why the market is punishing the stock is because its revenues were softer than analysts had been expecting to see. For the quarter, revenues came in at $8.04 billion, which was shy of the $8.11 billion that Wall Street was expecting to see from the company.

China has taken its first major step into the U.S. car market as General Motors announced it had finalized a deal to sell off its Hummer truck brand to Chinese auto manufacturer Sichuan Tengzhong Heavy Industrial Machinery.

Under the deal, GM will continue to make the trucks no later than 2010. While a deal has been reached, it is still going to be up to Chinese regulators to approve the deal and decide if the brand can be profitable and fit into the country's overall national strategy to improve energy efficiency.

Nike Inc. (NYSE: NKE) will get its chance to impress Wall Street when it reports its most recent quarterly results Tuesday following the market close. The company will be reporting its fiscal first quarter numbers, and analysts are expecting slightly lower numbers that its first quarter last year.

The giant in sports apparel and footwear last reported earnings back on June 24 when it was able to outpace analyst estimates, and this time around analysts are looking for the company to show earnings of 97 cents per share. In its first quarter last year, the company reported earnings of $1.03 per share.

New York Times (NYSE: NYT) Columnist Thomas Friedman returned to the subject of how green technology is not only good for the environment, but ultimately good for American wallets.

Good for American wallets, that is, if the United States seizes the day regarding green tech. Right now, in Friedman's view, the U.S. isn't: China is - it's embarking on simultaneous tracks of 20th century tech and 21st century tech to remain an economic powerhouse in the global economy ahead.

Why is China loading up on US Treasuries? At first glance that seems strange because the dollar keeps falling. Doesn't a falling dollar mean that inflation is on the way? Not necessarily. The Labor Department reported that prices of imported goods fell 15% in August from a year ago, this after a 19.2% drop in July. These numbers are telling us that there is no inflation coming in the near future. The Fed has plenty of wiggle room. It can afford to keep interest rates at historic lows.

So then why is the dollar weak? We know what the answer is. The Fed has pledged $12 trillion dollars to bail out the bankers, housing and the mortgage market, just to name a few areas where the money is going. Then too, we have sky high deficits. The current account deficit will rise to 3.2% of GDP in 2010 and 3.5% in 2011.

The current drivers of the market -- commodity speculation, green shoots euphoria, and enthusiasm over China thanks to fabricated Chinese economic data -- will be played out in the next few weeks.

Absent these drivers, there are no positive catalysts left to underpin a rising market.

Next: Sign #5: Earnings will disappoint

The Obama administration has announced that it is imposing tariffs on Chinese tire imports. The three-year plan will be have 35% tariffs the first year, 30% tariffs the second year, and 25% tariffs the third year.

This is good news for U.S. tire manufacturers and bad news for Chinese tire makers. American consumers will pay more for tires over the next three years than they would if they could buy cheap Chinese tires, but it will be a benefit for U.S. big labor and domestic tire makers as their products will be more competitive.

New York Times (NYSE: NYT) Columnist Tom Friedman returns to the subject of China and the global economy, and it's a column investors would be wise to review.

In a nutshell, Friedman argues that those who assert that green technology doesn't have the right stuff to move the U.S. GDP needle are misguided. China is investing hundreds of billions of dollars in electric cars, solar power, energy efficiency, batteries, nuclear power, and wind power.

To the surprise of many, China is now a major player in the world automobile market. Vehicle sales have risen 28% so far this year.

Full-year sales may reach 12 million vehicles, according to Chen Bin, director of the industry. Compare this to U.S. sales, which may reach 10.5 million this year.

In bold move, China's Ministry of Culture has set new rules for music sold online, acording to the Wall Street Journal (subscription required).

The rules require music sites to seek approval from censors for all foreign songs they distribute.

The new rules also affect music providers such as Google Inc. (NASDAQ: GOOG) and Baidu Inc. (NASDAQ: BIDU).

Finance ministers and bankers of the G20 nations agreed on two key proposals: 1. to keep the stimulus packages in place and 2. to limit bank bonuses.

Concerning the stimulus packages, a draft copy obtained by Reuters said: "We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies consistent with price stability and a recovery is firmly secured."

TheStreet.com's Jim Cramer says the action in China isn't enough to quiet the rumblings from other areas of the market.

It feels like there is too much vested in going down to allow this market to rally off of anything good in China. It's almost as if the pall's been cast and there's no sense in fighting it, even though this selloff began in China and might be ending there.

Plus, we have had a quick snapback in China before and the market just went right back down, signaling the bear market there is far from over.