A recent FT alphaville overview on the flurry of bad news on China. PMI's are also looking quite poor. Josh Brown, in his review of the Barron's article, touched on a key quote:
"A falloff in demand for steel, cement, and copper would lead to heavy layoffs. He reckons that some 25% of all Chinese steel consumption goes into residential real estate."
This is very similar to what I noted about a month ago with the varied, unknown connections that make the Chinese economy so fragile. Besides the direct job effects, copper prices have a dangerous relationship with collateral for financing, thereby creating the possibility for a financial mini-crisis in commodities along with the brewing housing debt problems. The Chinese economy is in a set of asymmetric straits. And for as much as the Chinese government is a "pragmatic" one, the serious suits at the top of the Politiburo are not phasing out state owned enterprises in favor of more efficient channels for growth, At such a juncture, perhaps central government easing can restore growth to above 8% and hold it relatively steady. But in the process, fault lines are deepened, and catastrophe looms. You know how good it can get, but you have no idea how bad it can become. So China will be fine, or it will go through crisis. And you never know where a single mistake can lead you.