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China's Booming?

CHINA'S ECONOMIC GROWTH is looking robust. Last week, the mainland reported that its economy grew 9.4% in the third quarter, beating expectations. September industrial production jumped 16.5% from a year earlier, the fastest growth rate since June.

Many mistakenly expected a slowdown this year. Today, again, some analysts are starting to mistrust the boom...

What do the data actually show about China's economy? Says Lakshman Achuthan, managing director at the Economic Cycle Research Institute in New York, and steward of the leading index of China industrial production, "Our leading index bottomed in early summer and then recovered..."

Looking ahead, however, the leading indicator is easing a bit. "We're now in a small cyclical upturn," Achuthan says. "We may get another quarterly GDP number that beats expectations. But when we look ahead, we see the leading index softening again."

The index forecasts two quarters out, and for now, at least, foresees a "noticeably slower" economy.