barronsThose who marvel at the wonders of China’s state-directed economy — cough, cough, Thomas Friedman, cough, cough — ought to read the latest Barron’s cover story from Jonathan Laing.

In his recent summit talks with President Barack Obama, China’s President Xi Jinping pointedly expressed his satisfaction with the Chinese economy.

But appearances can be deceiving, especially in China. Skeptics always have insisted that China’s economic numbers paint too rosy a picture. Now those statistics show a worrisome downshift in growth for both exports and industrial production. Signs of trouble abound.

A post-2008 credit bubble in China seems to be yielding increasingly limp GDP growth, as spending on gaudy new infrastructure projects and housing no longer packs the same punch. Miles upon miles of empty apartment buildings rim hundreds of Chinese cities; industries suffer from rampant over-capacity; and largely empty new highways, bridges, shopping malls, railroad stations, and airports more than hint at problems.

A number of observers, including some former China bulls, see the country headed for a potentially serious economic downturn, or possibly a Japanese-style purgatory of anemic growth, with all the baleful side effects. These could include collapsing prices for assets like real estate (stocks already sell at big discounts), diminishing wealth, and, in extremis, frenzied capital flight by rich Chinese.