HONG KONG — Whenever China's economy swooned in recent downturns, its currency never buckled. It held steady, or strengthened, even as China's neighbors or trading partners scrambled to cut the value of their own currencies to deal with the fallout.
With the Chinese yuan now taking its biggest plunge in decades, the worry is that the country's already slowing economy is even worse off and the government is panicking.
By the official measures, the economy is growing at 7 percent, right in line with government targets. But a look below the surface shows a different, more worrisome picture.
Core parts of the economy, like construction, are weaker than ever as the real estate industry struggles. Consumer spending, which was supposed to pick up the slack, is not that strong. And financial services, which were a major driver of economic growth when the stock market was booming, are slipping.
The data coming out of China, too, is somewhat suspect. Economists now wonder whether, despite official figures showing growth, some provinces and regions could be dealing with outright recessions.
"To be honest, no one has a clue where the economy is, and I don't think that it's properly measured," said Viktor Szabo, a senior investment manager at Aberdeen Asset Management. "Definitely, there is a slowdown. You can have an argument about what level it is, but it's not 7 percent," he added.
The government's aggressive action on the currency has brought the economy into sharp focus.
China allowed the yuan to weaken even further Wednesday after a sharp devaluation the previous day. The currency's official fixing against the dollar is down 3.5 percent in the past two days. On a typical day, the yuan rises or falls just a small fraction of a percentage point.
China's plan has been to wean itself off a debt-driven growth model that has led to wasteful, government-led investment. Instead, policymakers want consumers to become the main engine for the economy, but that will take time.
They hoped to maintain growth by keeping credit flowing to favored projects, a nationwide program that amounts to trillions of yuan worth of investment in new infrastructure. The money is going to redevelop shantytowns, expand road and rail networks and build wastewater treatment facilities.
In the city of Liupanshui in Guizhou, one of China's least affluent provinces, the local government is building its first subway line. Local officials hope to bring in private investment to help finance the line, which is to be 49 kilometers long, at a budget of $1.6 billion.
But such efforts have not been enough.
Infrastructure investment is rising, but it has failed to offset the nationwide pullback in spending on new factories and apartment block towers.
Consumers aren't yet able to shoulder the burden of driving the economy. While incomes are still rising, the job market has started to show signs of stress.
The stock market slump has also taken a toll, with the main Shanghai index down about a quarter from its peak two months ago. Ordinary investors have poured money into the markets during the past year, and many are now sitting on losses.
The overall result is that consumers are spending less.
One irony of the fallout from the central bank's move to devalue the currency: In the long term, freeing up exchange rates would give it another powerful tool for managing economic slowdowns, just like the one China faces now.
"Having an exchange rate that adjusts means that other parts of the economy, like interest rates or wages, don't have to adjust so much," said Arthur Kroeber, the managing director at Gavekal Dragonomics, a financial consultancy in Beijing.