Rascal observed going round China with Penny (8)
I believe the answer is:
spalpeen
'rascal' is the definition.
(thesaurus)
'observed going round china with penny' is the wordplay.
'observed' becomes 'seen' ('seen' can be a synonym of 'observed').
'going round' means one lot of letters goes inside another.
'china' becomes 'pal' (I've seen this before).
'with penny' becomes 'p' (I am not sure about the 'with' bit.**).
'pal'+'p'='palp'
'seen' enclosing 'palp' is 'SPALPEEN'.
Can you help me to learn more?
(Other definitions for spalpeen that I've seen before include "boy" , "Irish rascal" .)