A slowing US economy, moderating Asia, and a government keen to cool the pace of growth may take their toll on the Dragon that has been seething fire since 1997.
The third reading of the US GDP growth for the fourth quarter came in at 0.6 per cent annualised, on Thursday. This is the slowest growth since 2002 and pales in comparison to the third quarter growth rate of 4.9 per cent annualised.
It is estimated that one percentage point slowdown in the US growth could cut 3.2 per cent from China's export growth and will show up in the economic slowdown. Around 40 per cent of the Chinese GDP is accounted for by exports.
For February, China reported a 56 per cent drop in its trade surplus. China faced severe snowstorms in late January that coincided with the Chinese new year holidays in early February.
Logistical issues may have impacted Chinese exports. But if the trade surplus does reduce in the following months, it would be a clear signal that Uncle Sam's fever is giving China the shivers.
China faces an inflation which refuses to go away despite the CRR being hiked 15 times - from 7.5 per cent in July 2006 to 15.5 per cent now. The People's Bank of China, the nation's central bank, hiked interest rates six times during 2007, with benchmark one-year loan interest rates at a nine-year high of 7.47 per cent. But those efforts have shown little effect on domestic inflation which is running at an 11 year-high of 9.7 per cent.
China's economy grew by nearly 12 per cent last year, its fifth year of double-digit growth. Beijing plans to cut economic growth to 8 per cent this year from 11.4 in 2007, which is also likely to weigh on consumption.
China is the world's largest copper consumer, guzzling an estimated 4.5 million tonnes every year. A large part of that is used domestically but a lot also gets exported, contained in products from tubes and power cables to air-conditioners.
However, the country's copper imports fell 5 per cent in February from the previous month and could see a further slowdown as stocks in warehouses double. Steel and aluminium fabricators are beginning to feel the heat of the US slowdown and domestic demand will further slow with the tightening of credit.
China is an emerging great power but it is still a toddler in squeakies when it comes to stepping into the large shoes of Uncle Sam. Compared to the $9 trillion spent by US consumers per annum, the Chinese spend a measly $1 trillion.
China's eastern neighbour, Japan, is doing well but the sudden appreciation of the yen could hurt its exports. Though exports account for just 17 per cent of Japan's GDP, export-oriented companies in the Nikkei have a weight of around 40 per cent, making the Japanese stock markets more sensitive to yen appreciation than the economy.
South Korea's National Pension Service, the world's fifth largest, has said that it is looking at greener pastures than the US treasuries which are seeing plummeting yields. Though the fund holds just $14 billion in treasuries, the redemption pressure is increasing the need to seek better returns elsewhere.
This needs to be seen in the background of a meeting last week in which 16 Asian nations discussed the possibility of investing around $1 trillion in each other's bonds.
Amidst large I-banks, Lehman continues to be in the centre of market speculation. In times like this, companies would reduce the balance-sheet size by selling assets and retiring liabilities. But in Lehman's case, the balance sheet grew by 13.7 per cent in the last quarter and the gearing increased to 31.7 times.
This is not a good scenario. The world markets are still holding together, taking solace from the bold stance of the Fed that it will do whatever is required to save the US economy, even if it means buying any amount of questionable securities from ailing firms.