It is the economic equivalent of the Jaws theme: Foreclosures are hitting China.

First reported in 21st Century Business Herald, a major business newspaper in China, three cities — Hangzhou, Xinqi, and Ningde — reported a rise in bank repossessions stemming from loan defaults involving home owners and developers alike.

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In a sure sign the supposedly-miraculous Chinese economy is losing steam, housing prices slid for the third straight month in August in spite of developers discounting properties. A total of 76 Chinese cities saw housing prices fall. Two of those cities were the heretofore can-do-no-wrong wonderlands of Beijing and Shanghai. 

Eternal optimists are quick to point out the real estate markets in Beijing, Shanghai, and other top-tier cities are still highly profitable, and indeed, they are.

However, as the United States found out in 2008, toxic properties rarely pop up in major business centers. New York City barely noticed the Great Recession, while the bottom fell out from under Miami.

Hangzhou, Xinqi, and Ningde easily rate as Miami-type cities. Housing developments all over China, from Ordos in the north to Chenggong in the south remain empty. Several are in areas where the locals simply cannot afford them.

More pragmatic economists have been warning for years China shows all the signs of a speculation-driven bubble market. Beijing began to reign in the housing sector last year, even as it went after corrupt officials and tried to re-align its economy from exports to domestic consumption. The moves were highly praised, but the cost was an overall market slow-down.

Most experts agree China will have to come down out of the clouds at one point, but disagree how badly, how much, or how quickly.

If the country's economy fell below 5-6 percent growth, a "hard landing," unemployment would sky-rocket and government officials would face massive social unrest. China's Asian trading partners would be hit hardest, but the bear-market shockwave would be worldwide.