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 By China's standards 7 percent is already the weakest annual growth
in 25 years, but on the ground the slowdown in the world's
second-biggest economy is being felt more acutely in many sectors,
even those driven by consumer spending, which government data says
is growing around 10 percent.
"How can China's economy be growing at 7 percent?" said an executive
at a Western conglomerate that does business with a wide range of
Chinese and foreign firms in China.
He said his business wasn't growing that fast, and those of his
clients didn't appear to be, either.
Reuters spoke to 13 executives in charge of China operations at
international firms, and nine said they felt they were operating in
an environment where the economy was growing between 3 and 5
percent.
The nine included those from the banking, consumer goods
manufacturing, advertising, heavy machinery and commercial property
sectors.
One executive at a shopping mall operator said he was seeing flat
sales growth compared with a year earlier, while three in the
education, healthcare and e-commerce industries said revenues were
still growing in double-digits.
"It's very possible that GDP is getting boosted by factors we don't
see, such as government spending on infrastructure," said an
executive at a Japanese clothing wholesaler.
"If that's the case, money isn't circulating to the broader
economy."
Zhou Hao, senior economist at Commerzbank AG in Singapore, said it
wasn't only businessmen struggling to see 7 percent growth.
"Many traditionally reliable indicators such as power output and
rail freight have shown a serious deviation from GDP growth," he
said.
“Nobody knows what’s the real economic growth."
China's economy grew 7 percent in the second quarter, according to
the National Bureau of Statistics, and the government expects
full-year growth to be about the same.
STRONG POCKETS
To be sure, there are pockets of the economy, such as education,
healthcare and entertainment, where growth momentum remains strong.
Official retail sales data through August are still up more than 10
percent from a year earlier, though signs are emerging that consumer
spending is slowing, spooked perhaps by the summer's sharp declines
in the stock market.
Xie Zongyao, chief operating officer at Shanghai's Super Brand Mall,
one of Shanghai's largest shopping malls, backed by Thailand's
Charoen Pokphand Group, said sales had shown a slowdown over the
past two months after posting double-digit growth in the first half
of the year.
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"Consumers are more cautious when buying high-end brands, instead
opting to buy better-value products," he told Reuters.
"Performance (in the last few months of 2015) is not expected to be
better than the first half, so we will come up with more solutions
to drive sales."
E-commerce giant Alibaba Group Holding Ltd <BABA.N> said earlier in
the month it expected its total value of transactions - one of the
most closely watched metrics for e-commerce companies - to be lower
than previously thought in the July-September quarter because of
lower spending.
Growth in China's auto market, the world's biggest, slowed to a
standstill in August, compared with 7.7 percent growth a year
earlier. If it turns negative, it would be the first fall since the
market took off in the late 1990s.
The gap between official growth figures and the situation on the
ground in many sectors is posing a headache for some local
executives who say headquarters use GDP data to set revenue and
profit targets.
A China-based executive in the heavy machinery industry said orders
at his firm and affiliates were down about 50 percent from a year
earlier, mainly because of the sluggish real estate market, and he
had his work cut out getting that message across to head office.
"I am now increasingly sending news articles that highlight
weaknesses in the economy to HQ to make them understand our
situation."
(Additonal reporting by John Ruwitch and the Shanghai newsroom, Joe
White in NEW YORK and Kevin Yao in BEIJING; Editing by Will
Waterman)
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