Is China headed for a significant slowdown?

Economic data out of the People's Republic of China suggests that the communist nation may be headed for a period of uncertainty, marked by a rapid expansion in its so-called "shadow" banking sector and fallout from its bloated real estate industry.

According to several international economists, there are troubling signs ahead for the Chinese economy. On March 28, an unconfirmed leak suggested that Communist Party officials may institute restrictions on the country's housing market, which has seen tremendous growth in the past few years. Some investors fear that loose internal monetary policy has fed an enormous asset bubble, which could become unsustainable and financially threatening.

While figures out of the reclusive Asian nation are occasionally suspect, there are concerns among some observers that Chinese domestic real estate loans could stop performing, thus imperiling national credit markets. As the construction industry provides many jobs to China's impoverished lower class, rising employment could make the country's slowly deteriorating economic picture even worse.

The Wall Street Journal reported on March 27 that Chinese wealth managers will also be receiving increased scrutiny from government analysts, as the Communist party begins to crack down on the shadow banking sector. This micro-industry repackages loan securities and sells them to domestic and international investors, which provides a healthy boost to overall GDP numbers but could exacerbate lingering economic problems if they begin to worsen.

"In the process of developing this business, some banks have dodged lending restrictions and not promptly isolated investment risk," the Chinese government stated in a press release, according to the Journal.

With the global economy seemingly on the cusp of a period of relative volatility, it might be wise for investors to take a hard look at their portfolios to determine how they can better hedge against potential losses. One avenue involves purchasing cash flow real estate to provide a source of monthly income. To learn more, visit today and download a "Free Game Plan Report."