China held out longer than most; much of the developed world is already in recession, after all, and a number of developing countries are teetering on the brink. Now that the brakes are coming on in China, however, a ripple effect is inevitable as demand for oil, iron ore and all the other commodities required to industrialise the country shrinks. Australia is an early casualty. Within 24 hours of central bank chief Glenn Stevens flagging the China risk, Aussie miner Rio Tinto unveiled plans to slash 14,000 jobs.

For China itself the big fears, in addition to perennial worries about unemployment, are capital flight and deflation. The FDI and export numbers allude to the former. Data are magnified on the upturn by funds trying to evade capital controls: sneaking in an inflated FDI cheque, or over-invoicing for exports, allowed investors to punt on an appreciating renminbi. Now that bet has lost some of its lustre those “piggy-backing” funds are disappearing. Falling prices, meantime, are dismissed by bulls as “good” deflation; cheaper pork frees up more money for discretionary spending.

But persistent over-capacity sets the stage for a gloomier prognosis: bargain-priced goods, squeezed profit margins and more unemployment. Both fears come home to roost with the central bank, which has to stimulate demand without undermining the currency. Beijing has few means of reviving exports, but a decent amount of ammunition to blow on boosting domestic demand: it can afford to pump prime, order banks to lend and curtail capital outflows. Now that the accident has happened, speedy recovery hinges on urgent treatment.