China is doing something that could be a major headwind for stocks

As China scales back international spending, US stocks will be the ones to suffer. Here's why

As the Chinese government works toward controlling the country's capital outflows, it could be U.S. stocks that suffer as a result.

Specifically, real estate-related investments in the U.S. could be hurt most, according to Larry McDonald of the Bear Traps Report.

"The government's effort to simultaneously clamp down on capital outflows and property speculation could see new inflows in the Chinese stock market in search of a domestic investment alternative," McDonald wrote in a recent report to clients.

In recent years, China's commercial property outflow has ballooned as individual and institutional investors in the country have looked globally for real estate investment.

The "winner" in the Chinese government's efforts to pull back on capital outflows would be mainland Chinese equities over the next couple of years, McDonald said, as "more investors in China will be forced to keep their money at home."

Furthermore, investment product provider MSCI's decision earlier this year to include mainland Chinese stocks in its benchmark emerging markets index will open up mainland equities, which are still "drastically under-owned globally," McDonald wrote.