Learn English – What’s china blue

As this website on auto repair says:

If you are seeing blue smoke from your exhaust this means that your car engine is burning oil.

That's why this color is a very grayish blue; it's a hue similar to the tint you might see in car exhaust if the engine is burning oil, or similar to the color of exhaust you might see in a 2-cycle engine, where oil is mixed with the fuel rather than being stored in a sump.

Companies manufacturing paints, crayons, dyes, or fingernail polish are faced with the unenviable task of naming perhaps dozens of shades of the same base color, and they will often name some shades after everyday objects. Sometimes those names are simply reminiscent of the object they are named after, not exact matches. So banana yellow may not be the exact shade as a real banana, and denim blue might not precisely match your Levi's. In this case, this dull bluish green color had to be named something, and someone was evidently reminded of an oil slick or the blue tint of oil-laced exhaust.

^{Eggplant? Maybe not exactly, but close enough for a color palatte.}

To answer your first question: blue is not an object in this sentence. It is a complement, more precisely a predicative complement. There are two sorts of predicative complements: subject-related predicative complement (also known as a subject complement) and object-related predicative complement (a.k.a. object complement).

Blue in your sentence is a subject complement. A subject complement follows a linking verb and gives more information about the subject by identifying or describing it. It can be a noun, pronoun or an adjective (or a noun phrase, or an adjective phrase...). When it is a noun or a pronoun (or a noun phrase) we talk about a predicate nominative. When it is an adjective we talk about a predicate adjective. This is what "blue" in the example is.

How do you know if something is a subject complement or an object in a sentence?

1. Only transitive verbs can have direct objects. So, check the dictionary definitions of the verb in your sentence (most dictionaries will state if the verb is transitive, intransitive or can be both).

2. Try to make a passive voice construction. The object becomes the subject in the passive. A (predicative) complement cannot become the subject of a passive clause.

3. An adjective cannot function as an object. Ever.

** We could dig deeper into this but I think we shouldn't because: a) it might confuse you and b) it might confuse me. So we'll leave it at that.

To answer your second question: It is a clause and a sentence. As Kathy said (and according to Longman English Grammar) a clause is

a group of words consisting of a subject + finite verb (+ complement or object if necessary).

A sentence can contain one or more clauses. If it contains one clause ("The sky is blue") it is a simple sentence. If it contains more clauses it can be a compound sentence or a complex sentence.