The worst thing about IBM's bad earnings report? China

IBM down after hours; Problems in China

IBM doesn't normally break out China's results in its earnings reports, but this time it had little choice. IBM's Asia Pacific business overall was down 5 percent from last year's levels, and a huge portion of the problem appears to be in China.

"China was down 22 percent," Chief Financial Officer Mark Loughridge said on the company's call to analysts and reporters. "We experienced a slowdown in demand across the board, but most significantly in hardware, which was down about 40 percent and makes up about 40 percent of our business in China."

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(Read more: IBM shares skid after revenue miss)

Loughridge went on to say that the China hardware implosion accounted for a whopping 1.2 points of the 1.6-point constant-currency revenue decline across IBM -- roughly $300 million. IBM stock tanked on the news, falling 6 percent after hours to $175.45.

The big question now, the day after: Could this problem be bigger than IBM?

It could. I spoke to a C-level executive at another top-tier tech firm in the hours after IBM's report, and to him it seemed to make sense. His theory: China might be targeting big U.S. tech and hardware firms that have an outsized presence there for something of a squeeze. The rumor is, he said, that the Chinese power structure wants to direct more that business to domestic firms.

There were actually rumblings about this over the summer, after the NSA spying revelations from former contractor Edward Snowden. Chinese state media in June pushed for the country to develop its own Internet technology rather than rely on U.S. firms, suggesting that spies may have compromised equipment from U.S. firms. U.S. tech firms have denied that their equipment is compromised and that they monitor customer data.

And there are already China anomalies popping up in the results of some of the biggest U.S. tech names. At Cisco last quarter, sales in India and Mexico were up double digits, Russia and Brazil were flat, but China was down 6 percent. Apple's business in mainland China was up only 5 percent in the June quarter, a startlingly low number given that it had been up 8 percent and 67 percent in the previous two.

(Read more: IBM: A victim of slowing emerging markets growth)

Of course, any long-term China concerns might be overdone. Loughridge said he believes the real issue is that Chinese officials are overhauling their economic reform plan, and customers have just hit pause on their purchases ahead of that report, which is expected to be out in about a month. Demand, he said, could pick up after the first quarter of 2014.

That's a long time to wait, since Loughridge is saying not to expect any signs of a China turnaround until its July report at the soonest. In the meanwhile, we'll be looking for signs of China strain in Apple and Cisco's reports over the next couple of weeks.