China’s econ­omy less healthy in Q3

Enterprise - - International News -

China´s econ­omy was less healthy in the third quar­ter than a re­cent spate of up­beat data sug­gest, with growth com­ing ex­clu­sively from man­u­fac­tur­ing and prop­erty while the ser­vices and re­tail sec­tors fal­tered, a pri­vate sur­vey showed.

Man­u­fac­tur­ing posted its fastest ex­pan­sion na­tion­ally, with 53 per­cent of com­pa­nies see­ing rev­enue gains, up 3 per­cent from a year ear­lier, a quar­terly sur­vey of more than 3,100 firms by China Beige Book In­ter­na­tional (CBB) showed.

While a govern­ment in­fra­struc­ture build­ing spree and hous­ing boom have given a much needed boost to “old econ­omy” firms from steel mills to ce­ment mak­ers, CBB noted for­eign or­ders had also im­proved.

But “new econ­omy” sec­tors - ser­vices, trans­porta­tion and re­tail - showed weak­ness both quar­ter-on-quar­ter and

year-on-year, with cash flow and prof­its de­te­ri­o­rat­ing, leav­ing the coun­try on un­even foot­ing.

Ser­vices slowed and re­tail firms ex­pe­ri­enced one of their weak­est per­for­mances in the his­tory of the sur­vey as e-com­merce firms gob­bled up more mar­ket share.

“The chief prob­lem in China eco­nomic anal­y­sis re­mains the un­will­ing­ness to look be­hind du­bi­ous head­line data,” au­thors Leland Miller and Derek Scis­sors wrote in a note ac­com­pa­ny­ing the report.

“High-pro­file indi­ca­tors such as GDP and the PMIs this quar­ter will rub­ber stamp the govern­ment´s re­cov­ery nar­ra­tive, but only those with noth­ing on the line should ac­cept this at face value.

“Of­fi­cial data for Au­gust raised hopes the econ­omy was sta­bil­is­ing and per­haps even pick­ing up, with in­dus­trial out­put, re­tail sales and prop­erty in­vest­ment all quick­en­ing more than ex­pected, while in­dus­trial prof­its grew at the strong­est pace in three years.

But while the prop­erty sec­tor showed another quar­ter of strong growth, there are signs that China´s real es­tate boom is start­ing to stut­ter, the CBB report said.

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