The euro crisis is spreading its growth-sapping effect more widely. Container shipping costs from China to European ports have tumbled 39 percent since Sept. 1 because of a collapse in European demand for China's exports.

The Beijing government last week eased capital requirements for banks to encourage a little more growth as a closely watched index of purchasing managers, a reliable guide to future economic activity, sank to less than 50, a sign that the economy is contracting.

The China Federation of Logistics and Purchasing, which compiled the PMI on behalf of the national statistics bureau, said the index fell to 49 last month from 50.4 in October. They blamed a drop in new export orders in a context of rising wages, tight credit conditions and troubled property markets. The report added that stocks of finished goods had grown to the highest level since the index was launched in 2005.

At the same time, a private sector PMI compiled by HSBC/ Markit dropped to a 32-month low of 47.7 in November from 51 in October.

This comes at a difficult time for the Chinese economy, with a wave of strikes erupting last month in plants across China's coastal provinces, in protest at the failure to pay promised wage rises and cuts in overtime. Workers in factories making New Balance shoes, Apple and IBM keyboards, underwear, furniture and Citizen watches staged unofficial strikes.

After a series of 20 percent wage rises last year and the year before, the sudden slowdown has jolted labor relations, and not only in the private sector. In Nanjing, angry garbage collectors made their usual collections and then heaped the refuse into unsavory piles in the middle of the main shopping streets.

Inspired by the Occupy Wall Street movement, which has received wide publicity in China, supermarket employees in Zhejiang have taken up residence outside a Tesco store to complain of layoffs and broken promises of wage increases. And along with strikes by teachers in more than a dozen cities, often backed by parents and pupils, car salesmen for the Biyadi group came from all across China to protest at the manufacturer's Beijing headquarters to protest layoffs as car sales stalled.

The once-booming property market is in real crisis. The nationwide property company Centaline reported last week that prices for previously owned apartments had fallen to all-time lows in Beijing, Shenzhen and Tianjin. Centaline added that sales for newly built residential projects in 30 large and mid-sized cities fell 42 percent in October from the same period last year.

There are similar falls in the price of vacant land zoned for development and most local authorities raise the bulk of their investment budget this way. The China Index Research Institute reported a 45 percent decline in October, compared to the same month last year, averaged over 133 cities nationwide.

The institute also reported that Shanghai's government revenues from land sales were down 25 percent from last year. The Hangzhou and Nanjing governments each saw their revenues down by 30 percent each and the cities of Xi'an and Changsha faced drops in revenue of 50 percent.

"Capital market support of the real estate industry has basically been cut off," Deutsche Bank Asia Investment Banking Chairman Cai Hongping told a conference last month. "If the government doesn't move, the real estate industry will experience a major shock in the next few months. Housing prices will continue to fall, and many companies will go bankrupt."

Worse still, the property crisis threatens to become a banking crisis, since local government finance vehicles borrowed more than $786 billion in the past three years to finance land purchases for development. Many of those loans are turning soar, with new apartment blocks and shopping malls still vacant and prices tumbling.

This follows government action to cool the over-heated property market and Premier Wen Jiabao last month insisted that the measures wouldn't be relaxed, saying, "The government's objective is to return real estate prices to rational levels, while promoting sustainable and healthy development for the real estate industry."

The property boom followed the Beijing government's decision, at the height of the financial crisis in October 2008, to order its commercial banks to lend as never before to keep the economy afloat. They responded by lending $219 billion in 2009 and $204 billion in 2010, most of it to state-owned enterprises and local government finance vehicles.

This put the economy on steroids and on an unsustainable path. The result was that investment as a share of gross domestic product soared to an extraordinary 48.5 percent in 2010 and the M2 measure of money supply exploded to 140 percent that of the United States.

This is an economic crisis waiting to happen and the decline in China's exports to a stricken Europe is a key sign that the crisis is coming closer.