China's Economy Is Slowing, but Not About to Fall Off a Cliff

Market perceptions about China are too bearish, according to one expert who debunked several myths about the Chinese economy. One of those myths is that China's slowdown is intensifying, with economic growth indicators deteriorating rapidly. 'We saw a slowdown in the third quarter, but it was nothing remarkable,' said Leland Miller, President of CBB International, which releases the China Beige Book each quarter. The Beige Book uses independent data on the ground in China to assess the economy. 'Growth was stable on-year,' said Miller. 'You saw some improvement, you saw some slowdown, but certainly nothing that should be roiling markets right now.' Miller also said that investors pay too much attention to China's Producer Price Index, which measures wholesale prices, and the manufacturing sector. 'What we've been telling clients for over two years is that manufacturing is not a microcosm of the economy. It is not a bellwether of the economy,' said Miller. 'It's actually performed counter cyclically as much as it's been cyclical in the last two plus years.' Still, there is no doubt that China's manufacturing industry is struggling. The China Beige Book found that the performance of the manufacturing sector was the weakest it has been in eight quarters.