China: slowing, but still shopping

China has long been accused of manipulating its GDP figures, and the latest data did nothing to allay scepticism. The economy grew by 6.9% year-on-year in the third quarter, only a little down on the previous quarter, despite poor data over the summer. It left the government on track to hit its 7% full-year target. An alternative index devised by Chinese Prime Minister Li Keqiang, covering electricity consumption, bank lending and rail cargo – all deemed harder to fake than GDP – points to growth of 3%-4%.

But the idea that China is slowing is hardly new. What matters is the broad direction of travel, which is more encouraging. Industrial production growth eased to 6% year-on-year, but retail sales grew by 10.9%. “Despite widespread panic about the health of the Chinese consumer, she is clearly out spending,” says Lex in the Financial Times. “Take a look at any international shopping district.”

Stronger services are offsetting a weaker industrial sector, adds The Economist – good news, because services now comprise a bigger proportion of GDP than industry. As a result, the jitters over a hard landing look overdone, especially as recent cuts in interest rates have bolstered credit growth, and there is plenty of scope for more fiscal and monetary stimulus.


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