Slowing, sort of

China GDP: In China, a 10.3 per cent GDP growth rate is a slowdown. Last quarter, the rate was 11.9 per cent. Deliberate restrictions on the financing of construction projects helped cool down the world’s third largest economy by GDP. China's foreign critics may be impressed, but they are unlikely to be placated.

The slowdown was relative but real. Seasonally adjusted, the quarterly rate translates into GDP growth of eight per cent for the whole year, according to Goldman Sachs. That is regarded as the minimum China needs to keep adding jobs. Industrial output and consumer prices were lower than most economists expected. So was electricity generation, thought to be a particularly reliable indicator. Growth was slow enough to dispel worries about impending overheating.

But try telling that to China’s biggest trading partner. Lawmakers in the US will be more concerned by another piece of recent data: In June, Chinese exports were more than 40 percent higher than in the same month in 2009.

That increase seems to tessellate with the May rise in America’s trade deficit, to its highest since November 2008 — including an incriminating 12 per cent increase in imports from China.

The export statistic could be misleading. Chinese exporters may have pushed out shipments to get in ahead of the scrapping of value-added tax rebates, for example. But it is enough to raise fears that China isn’t really committed to reducing big global imbalances. This sort-of slowdown may also strangle hopes that China will allow the yuan to rise, taking the price of its exports up with it. Less construction activity at home leads to lower bills for commodity imports, so a stronger currency looks less attractive. Since the reform was announced a month ago, the yuan has strengthened just 1 percent against the dollar, and in the last two weeks has gone nowhere.

Washington won’t like that one bit. The Federal Reserve confirmed on Tuesday that the recovery in the United States has slowed down. For politicians, even a decelerating Middle Kingdom is a convenient scapegoat. The pressure inside China may have lessened, but its detractors abroad will be getting ready to crank it back up.