My favorite canary in the coal mine for global capital markets has been singing loud and clear, and that song is increasingly sounding like a funeral dirge. The Chinese stock markets (NYSEARCA:FXI) have been rolling over like a fatally injured kung fu warrior, the Shanghai index now down 22% YTD. The problem for the Mandarins in Beijing is how to throw cold water on a white hot real estate market without killing off the rest of the economy. In April, property prices soared a staggering 12.8%, helping drag consumer prices up 2.8%, making the government’s full year inflation target of 3% look like a total farce. The People’s Bank of China has raised bank reserve requirements three times to an extremely conservative 17.5%, boosted minimum home deposits, and outright banned loans on third homes, all to no avail. Traders around the world are bracing themselves for tougher measures to come, which have to include higher interest rates, and will put even greater pressure for a revaluation of the Yuan (NYSEARCA:CYB). The whopping great risk is that this will tip the rest of the world over into a double dip recession, as so many companies in the US and Europe are hugely dependent on exports to the Middle Kingdom. It all underlies how incredibly dependent on emerging markets the world economy has become, which are expected to generate 90% of the total GDP growth for the next decade.