The real number of corporate failures could be much higher. "Insolvency procedures are complicated and expensive, so a significant number of Chinese enterprises find alternative ways to avoid filing for bankruptcy," Islam said.

Slowing economic growth is the major culprit. Euler Hermes forecasts China's growth to decline to 6.8 per cent this year and 6.5 per cent next year. Some expect worse. Societe Generale estimates 6 per cent growth next year, while Fitch projects 6.3 per cent and 5.5 per cent for the next two years.

For now, Beijing doggedly clings to its notional target of 7 per cent, but commentators say the leadership may opt to bite the bullet rather than maintain appearances when it convenes later this month to discuss the 13th five-year plan.

"We see a chance of [the target economic growth rate] being lowered further to 6.5 per cent per annum for 2016-20," said Yao Wei, an analyst at Societe Generale. "If Beijing is still committed to structural reform, the focus of the plan should be more about restructuring state-owned enterprises and liberalising the service sector."

That would involve a turnaround on more than one front, after last month's state enterprise reform guideline underwhelmed observers by playing it safe. But Yao says crunch time is fast approaching.

"We think China cannot wait much longer. Even if a hard landing may be avoided in the short term, thanks to pervasive implicit state guarantees enjoyed by debt-laden [state-owned enterprises], China's productivity growth is suffering and the probability of a lost decade scenario is rising," Yao said.

Debt is part of the problem, but the credit addiction is not easily broken. Beijing wants to slow corporate debt, but it cannot cut credit without sacrificing growth. It also wants to diversify financing channels, but banks are being forced to shoulder the load as alternative channels dry up.

The stock market crash - although a "mere artifact" of the slowdown rather than a contributing cause, according to Euler Hermes analysts - has exacerbated the credit squeeze that started with official restrictions on lending and efforts to curtail shadow banking.

"Financial market effectiveness has deteriorated significantly during the summer and the economy has to rely more on bank credit to grow," Islam said. "Formal credit is increasing but its growth rate is not enough to compensate for the reduction in shadow banking activities."

Bank credit is also battling against rising credit intensity. In 2011, China needed 1.80 yuan of new credit to generate 1 yuan of growth. Now, almost 3.30 yuan of credit is needed to generate the same return, according to Euler Hermes.

That means the economy needs 16.7 trillion yuan of new credit, including 13.6 trillion yuan from the banking sector, to hit 8 per cent nominal growth. In the first seven months, 9.5 trillion yuan of new credit was released, of which 7.2 trillion yuan was from banks.

"Toleration of faster credit growth leading to more overinvestment could temporarily deliver faster growth … at the cost of a further build-up of structural weaknesses and vulnerabilities," Fitch analysts said in a note.

With regular bank lending now harder to come by, intercompany credit has sprung up as an alternative financing source for Chinese companies looking to supplement their working capital. Measured in days sales outstanding (DSO), a high reading suggests companies are waiting longer to get paid - amplifying systemic risk as cash-flow problems are shared around.

In 2007, Chinese companies were paid nine days earlier than the world average, but this year, they will have to wait 10 days longer than their international peers, according to Euler Hermes. This puts a strain on Chinese companies that is unlikely to ease, given the multiyear trend of rising DSO in emerging markets.

China faces tough times regardless of the choices it makes. While the threat to companies may not be as severe as during the global financial crisis, a broad range of sectors and regional economies look vulnerable.

The construction, materials, manufacturing and electronics industries face weak demand, excess capacity and price pressures. Technology, telecommunications and industrials have experienced the most rapid DSO increases, while commodities firms are up against a prolonged global price collapse.

China's rising labour costs have helped to make some Southeast Asian countries more competitive, but its slowdown creates a major shortfall in demand for those countries' exports.

The impact will be widely felt if China experiences a hard landing - a decline to low single-digit growth or even recession. In a note dated September 7, Societe Generale put the probability of a hard landing in the coming year at 30 per cent, citing "considerable downside risks".

In a note dated October 1, analysts at Fitch drew up a "shock scenario" in which China growth falls to 3 per cent next year after a collapse in private and public investment. That scenario would have Asia-wide ramifications, dragging down Hong Kong and South Korea and sending Japan into a deep recession.

But the base scenarios are not so dire. Beijing has a range of weapons to stave off a hard landing, including infrastructure and social spending, more favourable financing conditions and tax breaks. Policy rates and reserve requirement ratios have room to move, as does the currency rate. But China needs to get better at signalling its moves.

"In a world where major economies tend to be transparent on their policy orientation, the unexpected change in the exchange rate formation mechanism and the following currency devaluation have been seen as an early indicator of worsening economic activity and the beginning of a continued currency depreciation," Islam said.