Even without this risk, the last time China's economy slowed, in 1994, its foreign exchange reserves plunged. Companies resorted to a wide variety of tactics, like overcharging their foreign subsidiaries for export shipments, to get money out of the country.
"All the elements of a meltdown are evident, including balance-of-payments risk," wrote Carl Weinberg, chief economist of High Frequency Economics, in a report last week. "The only question for us is when something might break."
Others, like Liang Hong (梁紅) at Goldman Sachs, are more sanguine. They suggest that the government can slow some industry sectors without harming consumer confidence and without cutting back on infrastructure investment to address the economy's bottlenecks.
The most crucial bottleneck is electric power. Shortages have become so severe that the Chinese have started importing power from Russia, according to a Xinhua report last Wednesday.
Multinational companies, which do not depend on the country's banks to finance their projects, are still building factories in China at a brisk pace: Volkswagen and DaimlerChrysler announced plans for additional assembly plants last week.
Overall, investment in fixed assets in China rose 43 percent in the first quarter, a pace that makes the US telecommunications and Internet investment booms of the late 1990s look modest by comparison. It took the US economy several years to work through its excesses when the bubble burst.
The biggest risks are that China will find itself with another large round of nonperforming loans in an already limping banking system, and that economic troubles could stir political unrest.
The last true hard landing in China occurred in 1989, around the time of mass demonstrations in Beijing that ended with the killings in Tiananmen Square.
With that memory, Supple said, "The government's very afraid of the unemployment consequences of a hard landing."
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