The thesis of China facing weaker nearterm economic growth is widely accepted at this point. Â Moreover, the slowdown in the nation’s manufacturing sector this month (see chart) has provided some support for this view. But as we have seen in recent years, it could be a temporary correction related to some seasonal patterns. Given the difficulty in obtaining reliable data out of China, what other evidence do we have that the nation’s economy is actually slowing? Here are four signs that seem to support the “slowdown” Â thesis.
1. For the first time China’s “insiders” are calling for weaker growth:
WSJ: – China’s state media have long accused foreign analysts of being too bearish on the Chinese economy. Those analysts looking in from the outside are often said to be too eager to be “chanting declineâ€â€”chang shuai—when it comes to the economy’s prospects.
This time around, China’s own economists seem to be chanting a pessimistic tune about growth prospects. Perhaps they are not quite as negative as those pesky foreign counterparts—who according to at least one report China’s state media are being told to avoid—but they are increasingly outspoken about slowing growth and rising financial risk.
“We are now in a painful stage,†economist Wang Luolin told a seminar this week. “Let’s not try to dress things up,†said the consultant to the Chinese Academy of Social Sciences, a government think tank.
Yu Bin, a senior researcher at the influential Development Research Center under the State Council, took a similarly pessimistic view.
“The fact is, China’s economic growth is facing substantial downward pressure,†he said. “I don’t think we should get our hopes up for this year’s growth.â€
2. The nation’s central bank has once again halted the currency appreciation. The authorities tend to do this during periods of economic uncertainty in order to provide some support for China’s exporters.
