China’s slowing growth is denting commodity prices and roiling global economies and companies alike. Monday will offer a fresh look at just how sharp the slowdown is when the country releases third-quarter GDP data. Here are five things to watch: Premier Li Keqiang is targeting real gross domestic product growth this year of “around 7 per cent”, following actual growth of 7.3 per cent last year. Growth in the first two quarters matched the government target exactly, at least according to its own data. But economists expect the rate to dip to 6.7 per cent in the third quarter, which would be the slowest since the depths of the financial crisis. The spokesman for China’s statistics bureau said last month he believed growth as low as 6.5 per cent would still be considered within the target range. Nevertheless, if it falls below 6.7 per cent, calls for more aggressive stimulus will intensify.
GDP deflator
The GDP deflator converts nominal GDP to real GDP by stripping out inflation. Economists have long suspected that China’s statistics bureau manipulates it to window-dress the closely watched and politically sensitive headline growth figure. Understating inflation serves to make real growth appear faster than it actually is. The deflator was negative in the first quarter at -0.33, implying the economy was in outright deflation but renewing doubts about its accuracy. It rose back to positive territory at 0.09 in the second quarter. Another negative reading in the third quarter would again raise questions about whether the deflator is being used to “smooth” the appearance of volatility.