It appears that the party is over for many Chinese and international investors who thought, just like America a few years ago, that the housing market would continue to expand and home prices rise forever.
The credit and housing bubbles upon which a lot of Chinese growth depends appear to be bursting. Ambrose Evans-Pritchard:
It is hard to obtain good data in China, but something is wrong when the country's Homelink property website can report that new home prices in Beijing fell 35pc in November from the month before. If this is remotely true, the calibrated soft-landing intended by Chinese authorities has gone badly wrong and risks spinning out of control.
The growth of the M2 money supply slumped to 12.7pc in November, the lowest in 10 years. New lending fell 5pc on a month-to-month basis. The central bank has begun to reverse its tightening policy as inflation subsides, cutting the reserve requirement for lenders for the first time since 2008 to ease liquidity strains.
The question is whether the People's Bank can do any better than the US Federal Reserve or Bank of Japan at deflating a credit bubble.
Chinese stocks are flashing warning signs. The Shanghai index has fallen 30pc since May. It is off 60pc from its peak in 2008, almost as much in real terms as Wall Street from 1929 to 1933.
"Investors are massively underestimating the risk of a hard-landing in China, and indeed other BRICS (Brazil, Russia, India, China)... a 'Bloody Ridiculous Investment Concept' in my view," said Albert Edwards at Societe Generale.
The difference in China is that social unrest is rising at the same time the economy begins to tank. The village of Wukan has been blockaded by authorities due to violent protests against the inequalities inherent in Chinese society. It's not an isolated incident, of course. Tens of thousands of protests are reported every year and the Chinese government's response has been inadequate, or worse.
Might a Chinese downturn exacerbate our own economic problems? Considering the importance of China to the world economy, it is a definite possibility.