China's economy is cooling unexpectedly fast. All of the data points to it: industrial production growth is growing at its slowest annual rate since 2009, electricity production fell in August for the first time in four years, and foreign direct investment is at a two-and-a-half-year low.
Meanwhile, property sales are down and prices have been falling for five months. The economy is now expected to miss its 7.5% GDP growth target for 2014.
In response, the People's Bank of China, the central bank, injected $81bn into the banking system in the form of three-month loans.
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"The effect of China's real-estate slump is starting to spread," said Lingling Wei in The Wall Street Journal. Estimates suggest that around 25% of the economy is tied to the real-estate sector, with affected industries ranging from building materials to appliances.
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"We're reaching a moment of truth," reckoned Shen Jianguang of Mizuho. The government will be worried that the property slump will turn into "an economy-wide crisis".
The property market was blown up by a credit bubble. When firms produce less, they have trouble servicing their debts, said John Foley on Breakingviews. Corporate bank loans have reached 95% of GDP. "Liquidity becomes precious when many borrowers aren't paying back loans on time." Hence the cash injection.
But as the facility only lasts for three months, it won't make much difference to lending and the economy. "For now the tone is of doing a little, saying less and changing almost nothing."
The government is walking a tightrope. It doesn't want to blow the credit bubble up any further, and wants to wean the economy off debt by encouraging consumption and deregulation.
To counter the slowdown, it has been using targeted measures, such as directing stimulus at specific sectors, such as railways and public housing. Still, if growth falls below a certain point, there could be a danger of social unrest, implying a wider stimulus, such as interest-rate cuts but then also a potentially bigger credit bust in the future.
"China's market Leninists'," said Ambrose Evans-Pritchard in The Daily Telegraph, "may find it just as difficult to deflate their housing bubble as Japanese and American capitalists before them."
