Roylat.com

I commonly see estimates for 2008 Chinese growth of 6% to 8% expansion. This would be a substantial reduction from prior years, but still a big positive force in the world economy. Recent news from China suggests, though, that the contraction is sharper and stronger than that reflected in the general growth forecasts.

• In the 3th quarter, non-cash transactions declined by 8%, the first decline ever. Most telling to me was that credit card purchases (which now represent 25% of all consumer purchases) increased by just 4% year to year, despite a 70% increase in the number of cards outstanding. A year ago, the year to year increase in transactions was 58%! [Source]
•  The New York Times reported that exports, a mainstay of the Chinese economy plunged 11.6% year to year in local currency (Yuan) adjusted for inflation The decline measured in dollars was 2.2% (the difference reflecting the depreciation of the dollar relative to the Yuan).The Times article details the social and economic repercussions of this contraction. December results were evidently similar. As the chart above shows, recent results are staggeringly different from the 20+% growth rates of previous years. Exports represent about 40% of total Chinese production; thus the shifts taking place in exports will have very large impacts throughout the economy.
• Latest figures revealed by the Beijing Bureau of Statistics show that housing sales area between January and November totaled 7.389 million square meters, a drop of 52.4% over the same period of 2007. [Source]

The contraction in the Chinese economy, even if is to a much lower but still positive growth rate, will have impacts throughout the world, especially on those countries that supply industrial commodities, but on all of its trading partners and financial investors — which includes just about every country.

Within China itself,  low positive growth may not suffice to avoid major internal political problems. Nouriel Roubini notes:

… China needs a growth rate of 9-10% to absorb about 24 million folks joining the labor force every year; it needs a growth rate of 9-10% to move every year about 12-14 million poor rural farmers to the modern industrial/manufacturing urban sector. The whole social and political legitimacy of the regime of the ruling Communist party rests on continuing to deliver this high growth great transformation of the economy.

Others with good credentials reject this pessimistic outlook (see, for example, Brad Stetser, quoted by Naked Capitalism). The greater optimism rests on the perceived ability of the centralized state control of China to respond more quickly and effectively to economic shocks than the Western, capitalist economies. If this optimism is well founded, it should give pause to the almost unthinking acceptance of the prevailing paradigm that underlies U.S. and European policies — maximum reliance on the capitalist system and minimum direct control by the central government. More about this at a later time.

At a minimum, one should be aware of a possible "China surprise" adding to global woes.