I've just been looking over some data on the Chinese construction industry collapse, and the signs aren't pretty... steel and cement manufacturers slashing output (China produces 44% of the world's steel and 60% of the world's cement) because user inventories are so high there's no place left to store the stuff, China-bound timber piling up on the docks in Vancouver for the same reason.

The backlogs are running up any number of supply chains... equipment makers are sitting on thousands of units they can't sell, complaining that local governments aren't budgeting for infrastructure. The reason is that for the last decade China's local governments have supported their budgets by land sales to developers, often sweetheart deals where developers borrow from banks to buy land from local governments, and the developers, the bankers and the local governments are very closely connected. Those deals are no longer happening, developers are sitting on hundreds of thousands of units that can't be sold and banks are sitting on billions in loans that can't be paid.

China’s automotive inventory stood at about 4 million units at the end of 2011; 2 million to 2.5 million units is normal. People aren't spending like they used to.

A lot of people wondered why China's economy, seen as largely export-based, was not severely impacted by the downturn in the markets it exports to. It's increasingly clear that this was because China's economy and growth have become increasingly dependent on local industries that are every bit as speculative as the real estate industry in Phoenix, Miami, or Dubai was in 2006.

So how does all that impact China's relations with Africa, and with others? Less resource demand, certainly. Possibly large inventories of basic materials that may be dumped onto other markets, potentially to the detriment of domestic industries in those countries. Also possible that the Chinese will have a large labor force that suddenly needs work, and thus may increase attempts to export labor.

It will be very interesting to see how Chinese engagement in Africa and elsewhere is affected as reality catches up with the domestic economy.