China's Economy -- One Month Does Not a Trend Make

China GDP rose only 7.4% last quarter, a disaster by the standards of the People’s Republic. Analysts put on a brave face. September was OK, they said. Industrial production moved higher by 9.2% in the month. Fixed asset investment in China’s big cities was higher by 20.5% for the first three quarters. As many economists have pointed out about U.S. joblessness numbers, there can be distortions from month-to-month. China is notorious for releasing figures that are suspect. The industrial production numbers could be well outside a normal range of acceptability.

For China, the open issue remains where its exports will go and who within the nations buys goods and services. The slowdown of exports almost certainly has hurt most manufacturers. Fear of a slowdown almost certainly has undercut consumer activity. It is not, as the overused saying goes, a “perfect storm,” but if the world’s economy continues to sputter, it is close to one.

The IMF and World Bank have revised their estimates of China growth downward — as low as 8%. If its economy can recover to that level from the 7.4% of last quarter, it will be a start. But it will only be a start , and its sustainability is suspect.

Douglas A. McIntyre