Chinese economic outlook too grim, survey shows
Beijink (Sept 21) While China's economy in the third quarter was moderately weaker than in the second quarter, it was hardly the "game-changer" that prompted global markets to fall sharply, according to a survey of companies operating in China.
Manufacturing saw its weakest performance in two years during the July-September period, but services remained strong, both in quarter-on-quarter and year-on-year terms, according to China Beige Book International, based on a survey of over 2,100 firms. And while exports in China were weaker, they were a less significant driver of overall growth in the world's second-largest economy, the group said.
"In China's maturing economy, not only is manufacturing no longer the bellwether of the overall economy, but exports are no longer the bellwether of the manufacturing sector," said the group in a report. "Current market perceptions of China may be more thoroughly divorced from facts on the ground than at any time in our nearly five years of surveying the economy," it added.
Margins and job growth for companies in China inched up for a second straight quarter while wage growth fell only slightly, China Beige Book said, adding that global investors have adopted an excessively negative view of China's prospects in the wake of the mid-June stock market collapse and surprise currency action in August.
The group said producer deflation hasn't been a major concern for the majority of companies that responded to its survey: while sales prices weakened in the third quarter over the second quarter, input prices weakened even more, helping to expand profit margins, it said.
The China Beige Group said there is a history of global investors overreacting to problems in China. "Those touting China's sudden fragility are either exaggerating current problems or have entirely missed the slowdown of the past several years," it added.