China Beige Book reveals new twist

Beijing - Slowdown perceptions 'divorced from facts'

China's economy isn't as weak as it may look, according to a private survey from a New York-based research group that says it's a myth the nation's slowdown is intensifying.
"No collapse is nigh" in the aftermath of the stock market plunge and currency devaluation, according to the third-quarter China Beige Book, published by CBB International and modelled on the survey compiled by the Federal Reserve on the US economy.
Capital expenditure rebounded slightly in the period and the services sector showed strength, the report said.
"Perceptions of China may be more thoroughly divorced from facts on the ground than at any time in our nearly five years of surveying the economy," CBB president Leland Miller wrote in the report. "Global sentiment on China has veered sharply bearish - too bearish. While we have long cautioned clients against relying on rosy official views of the Chinese economy, we believe sentiment has swung substantially too far in the opposite direction."
The report describes a mixed, rather than disastrous, picture of the world's second-largest economy. Weakening exports, deepening factory-gate deflation and a manufacturing slowdown have highlighted the risk of this year's expansion undershooting Premier Li Keqiang's target for growth of about seven per cent.
The survey's findings contrast with deepening scepticism over China's outlook and policy makers' ability to steer the economy. Fed Chair Janet Yellen last week referred to concerns about the "deftness" of China's response to downside risks, while Goldman Sachs Group chief executive officer Lloyd Blankfein called the handling of its stock market collapse "ham-handed."
A Bloomberg monthly gross domestic product tracker remained below the government's goal in August with a reading of 6.64 per cent. The nation's official factory gauge slumped to a three-year low last month.
"Manufacturing is neither a microcosm of the economy nor its bellwether, and performances in other sectors buoyed overall results," Miller wrote in the report with Craig Charney, director of research and polling. They said retail and property weakened, yet were still stable and improved from a year ago.