Investors have a lot to worry about without cause to fret about China, but now they have that too. Trend growth is slowing down, and markets have been shaken up by the actions of the People’s Bank of China (PBoC), which is trying to tame a virulent credit boom.

The incidence of financial distress is rising and becoming more visible. The recent drop in the renminbi, and the sharp fall in copper and iron ore prices are the latest high-profile manifestations of China’s changing outlook. These are not random developments or bad luck, but connected parts of a complex economic transformation with deflationary consequences for the world economy and skittish financial markets.

In the first two months of 2014, industrial confidence and output indices, retail sales, fixed asset investment, and credit creation were all weaker than expected. A slowdown in economic growth at the start of the year, coinciding with the Chinese new year holidays, is not unusual, but in each of the past two years, the government sanctioned faster credit growth and infrastructure spending to compensate. This time, those options are not available, or much riskier, because the government is trying to change China’s economic development model.