Currency move suggests severe growth slowdown China’s economic juggernaut has been the force driving the world’s economy forward, from the oil fields of North Dakota to the condo markets of Sydney and Miami. So Beijing’s surprise move to slash the price of its currency against the U.S. dollarDXY, +0.29% has far-reaching implications. And the yuan devaluation means the unthinkable may have happened. China, which is supposedly growing by 7% a year, may instead be facing recession. Or it may even have already fallen into one. Cutting the exchange rate of the yuan involves a loss of “face” and risks angering China’s trading partners. This is a panic move by the Chinese ruling Communist elite to make its exports cheaper and get factory orders moving again. This does not come out of the blue. In a note to clients penned just before this week’s devaluation, Crispin Odey,a London-based hedge fund manager, said “China’s economy continues to slow down whilst monetary policy tightens. When does it go into recession?...From where I look, China seems to be sacrificing any growth it might get out of its misshapen economy by holding onto the currency peg with the US dollar. The day that China understands that it must devalue is the day that deflation really breaks out across the world.” Even though it is almost impossible to get really accurate economic data out of China, we can fill in a lot of gaps from what we do know. And recently the data points have been adding up that China’s economy is braking hard. Consider: House prices have fallen year-over-year in 68 of the 70 biggest cities, the Chinese government recently admitted. Profits at industrial companies fell by 0.7% in the first half of the year, and at key state-run industrial companies by a stunning 21%, the government also said. Copper imports fell 14% by volume in the first four months of this year, data from the Chinese customs agency show. Rubber imports slid 16%, and imports of coke (the fuel made from coal) by 38%. Imports of luxury Swiss watches into China (including Hong Kong) dropped 13% in the first half of this year, according to the Swiss Watch Federation. The Shanghai Composite stock market index just collapsed by a remarkable 25% in a few weeks (after first spiking, to be sure). China’s official figures say that the economy is still growing at 7% a year. But no one really believes them. Even the current premier, Li Keqiang, once said that the gross domestic product figures were “man-made” and “unreliable.” What’s the truth? Fathom Consulting, an economic consultancy that advises investment banks, businesses and governments, says its own indicator shows that China’s growth has recently collapsed to less than half that. Fathom’s China Momentum Index suggests China’s GDP is now growing at an annual rate of just 3%. That’s a far cry from the 10%-plus levels seen just a few years ago. And the latest move by the Chinese government makes you wonder if that’s bearish enough. Former Chinese premier Hu Jintao once told then-President George Bush that what kept him up at night was how to create 25 million new jobs per year. The Chinese economy is like a bicycle: It has to keep moving forward to stay upright. What happens if it stops? We may be about to find out. MarketWatch