Transplanting or moving the plant to a new location is often stressful enough to cause the hibiscus to drop its leaves. The new location may have differences in light levels or a cool draft that can cause the leaves to yellow and drop. The hibiscus also will drop its leaves during the season changes, due to the temperature and light differences. In most cases, the leaves grow back quickly once the plant has adapted to the new condition.
The hibiscus is extremely susceptible to over or under watering, and both extremes may cause leaf yellowing and dropping. Never allow the plant to completely dry out between waterings, yet avoid keeping it saturated. For best results, water the plant from the top of the pot so the water leaches through the soil, removing any soluble salts that can harm the plant if they accumulate. To check the moisture levels in the pot, insert a finger into the soil to the second knuckle. If the soil is dry to that point, the plant needs water. In the winter when growth is slow, allow the plant to dry out slightly between waterings to help prevent root rot. Be careful not to over water, which may cause root or stem rot.
Understanding how much fertilizer your hibiscus needs is important since yellowing or dropping leaves can be the signal for more or less nutrients for your plant. When actively growing, the hibiscus tends to be a heavy feeder requiring regular feedings with a balanced fertilizer, complete with minor elements such as iron. Although they are heavy feeders, hibiscus do not like large amounts of fertilizer at one time, so try feeding the plant more often with smaller applications to reduce the risk of overfeeding. Never feed the plant when the soil is dry because the nitrogen in the fertilizer can cause root burn and plant damage that shows up as yellowing, dropping leaves. Reduce the amount of fertilizer during the cold seasons when the inactive plants require little to no food.
Root and collar rot fungal diseases can infect the stems and roots of the Chinese hibiscus. Displays of yellowing, dropping leaves are often the first warning signs of these rots. And the plant may wilt, appearing to need more water even when the soil is moist. Most often, the cause of these diseases is over watering, poor drainage or lack of proper air circulation. Treatment is to reduce water, improve soil and air conditions and treat with a fungicide. Though fungicide treatments are often more expensive than the cost of a new plant, so you may be better off replacing the sick hibiscus with a new one.