Betting on China has been all about moral hazard this year as investors hope that government magic will transform bad economic news into good. In the spring, a mini-stimulus improved sentiment towards the country, and increased lending saw the economy and shares rebound.

But last week the wizard stepped out from behind the curtain and, yesterday, market munchkins stopped believing. The wizard is Premier Li Keqiang, and the curtain the target of 7.5 per cent growth, which he accepted might be missed. After data showed the slowest growth in industrial production since the aftermath of Lehman, the renminbi made like the Wicked Witch of the West, and melted.

The offshore renminbi traded in Hong Kong had its worst day in three years against the dollar. The munchkins deserted red chips too, with Chinese stocks listed in Hong Kong dropping 1.6 per cent, even as domestic shares rose.