Cramer's 'Mad Money' Recap: China's Great Leap Forward (Update 1)

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The stimulus is working, Jim Cramer told the viewers of his "Mad Money" TV show Thursday.

Sadly, it's working not in the U.S. but in China where consumer demand is increasing, confidence is rising and jobs are being created, he said.

Cramer said today's conference call by Alcoa (AA Quote), the first of the stocks in the Dow Jones Industrial Average to report its earnings, laid out a pattern that he fears will be followed by other companies.

He said Alcoa delivered better-than-expected earnings, with a smaller-than- expected loss, but was only able to do so by firing workers in America and investing more in China.

Citing Alcoa's CEO Klaus Klinefeld, Cramer said that much of the Chinese stimulus package went toward huge "shovel-ready" infrastructure projects. In addition, the Chinese government focused on promoting consumption, and for the first time, the Chinese will produce more cars than the U.S.

By contrast, the U.S. stimulus included large handouts to the states and extensions of unemployment benefits, said Cramer. Our government, he said, is focused on anti-business initiatives like cap and trade, and not on job creation or promoting consumption.

Cramer said the pattern will likely be repeated, with companies firing here so they can hire and expand in China. He said investors need to be defensive with their portfolios in of U.S. stocks, and need to get aggressive with their exposure to China.

Check out the latest edition of "Cramer's Take on Top-Searched Stocks" on Stockpickr.

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