China's cooling economy has already roiled global commodity markets and prompted slowdowns in places such as Latin America, Australia and Germany that had been big beneficiaries of the Chinese boom.
The Chinese economy grew at its slowest pace since the depths of global financial crisis last quarter and is almost certain this year to register its weakest annual growth rate since 1990.
But continued rapid and unsustainable growth in a range of important indicators suggest strongly that China's slowdown has a long way to go before it levels off.
The current deceleration has happened even as credit is still expanding faster than gross domestic product, local governments continue to borrow far more than they can afford and investment in everything from steel production to real estate is rising fast, even as sales slump.
Given falling demand, the rise in all these indicators is unsustainable and at some point soon they will have to come down, inevitably causing China's growth to slow more sharply.
"I'm confident we won't see a collapse or a financial crisis in China but as credit conditions tighten in the next year or so things are going to get ugly and we will have much less growth," says Jonathan Anderson, president of Emerging Advisors Group, an independent macroeconomic research firm. "What we will inevitably have is a big shakeout on the supply side because that's where all the credit has gone and we may see companies start going bankrupt in droves."
With a 7.3 percent expansion in the third quarter from a year earlier, China still has the fastest-growing big economy in the world but as recently as 2011 it was growing by nearly 10 percent.
As Chinese exports collapsed in the wake of the global financial crisis five years ago, the government launched a credit-fueled investment boom that reignited growth.
In what was intended to be a temporary measure, Beijing lifted controls on credit and flooded the economy with cash, much of which was funneled into an expanding property bubble.
The result was a construction boom and an unprecedented increase in total debt to GDP from 147 per cent at the end of 2008 to 251 percent by the end of June this year, according to estimates from Standard Chartered.
Credit expansion has slowed in recent months but is still growing a lot faster than GDP while providing less and less growth for each renminbi borrowed.
The World Bank alluded to this problem last week when it advised China's rulers to abandon their obsession with trying to hit annual GDP targets (set at "around" 7.5 percent for 2014).