ALERT :China’s economic rebound “is over”..............17.12.2013

China’s economy has slowed down again in the final months of the year, according to analysts at London consultancy Capital Economics. And growth may be back to where it was before the Beijing government caused activity to rebound over the summer with a new round of GDP-boosting stimulus measures.

Official statistics will show that the economy expanded around 7.5 per cent, year on year, in the final three months of 2013, Capital Economics predicts. That is the same rate of growth recorded for the three months to June, and is below the 7.8 per cent expansion seen in the third quarter.

Capital Economics’ forecast is based on its “China Activity Proxy”, which is made up of data that tracks economic activity such as travel, property sales and the volume of goods being shipped across the country. Here is what the group sees is happening: Cargo moving through China’s seaports is “unusually slow”.

Growth in the number of passengers travelling by road, rail water and air is “close to a multi-year low”. Construction accelerated in November, but developers’ unsold inventory is rising so housebuilding should slow down.

On the plus side, demand from overseas “looks to have held up relatively well”.
Capital Economics also says its “China Activity Proxy” has since 2012 “signalled that growth has been 1-2 percentage points slower than the official GDP figures”.

Below is a chart of how the proxy has predicted changes in China’s GDP figures.