As corporate defaults surge, forcing a desperate PBOC to reverse its deleveraging efforts and threaten more interventions to stave off a more serious retrenchment in growth in the world's second largest economy, it seems like not a day goes by without another warning sign that China's economic precarious situation is even worse than we thought.

The impact this has had on the mainland investors' psyche has been obvious to all. Repeated interventions by China's 'National Team' have done little to arrest the inexorable decline in mainland stocks in October, leaving the Shanghai Composite, the country's main benchmark index, on track for one of its worst months since the financial crisis, and its worst year since 2011. Meanwhile, a flood of FX outflows has pushed the Chinese yuan dangerously close to the 7 yuan-to-the dollar threshold which, if breached, could unleash another wave of chaos across global markets.

And as Chinese policy makers are probably already scrambling to pad the official stats, Bloomberg has released its own proprietary preliminary gauge of Chinese GDP in October which showed that the slowdown unleashed by the US-China trade war worsened in October.

The Bloomberg Economics gauge aggregates the earliest-available indicators on business conditions and market sentiment, and unequivocally affirmed that the Communist Party's efforts to stabilize the country's economy and markets - the party this month introduced a raft of measures to stabilize sentiment, including steps to boost liquidity in the financial system, new tax deductions for households and targeted measures aimed at helping exporters - haven't been successful - at least not yet.

Kyle Bass and the other prominent China bears across the US hedge fund community will be pleased to see the latest early indicator from Bloomberg, which suggests that economic growth in China remained (relatively) sluggish in October after slowing to its weakest level since the crisis during the third quarter.

All of this suggests that China's October PMI, due out later this week, will confirm that the weakness in the China is multipronged, with consumption and manufacturing in the midst of a multipronged slowdown, after the survey-based index fell to an eight-month low over the summer. China's increasing desperation is President Trump's gain, as the loss of investor confidence could force Chinese policy makers to engage in meaningful talks later this year despite the government's reluctance to even consider America's demands. That could improve the likelihood that the elusive "major breakthrough" being sought by both sides could finally arrive.

The upshot of all of this is that, unless they want to roll the dice and start arresting short-sellers and pumping an unprecedented amount of debt into its financial system, risking even more destabilizing corporate defaults, Chinese leaders will need to find a way to end the trade battle with the US - and do it soon.