Firms feel chill amid China’s slowdown

China’s economy is officially growing at a brisk clip of 7%, but many locally based executives at multinationals say they wouldn’t know it from the performance of their businesses.

By China’s standards 7% is already the weakest annual growth in 25 years, but on the ground the slowdown in the world’s second-biggest economy is being felt more acutely in many sectors, even those driven by consumer spending, which government data says is growing around 10%.

“How can China’s economy be growing at 7%?” said an executive at a Western conglomerate that does business with a wide range of Chinese and foreign firms in China.

He said his business wasn’t growing that fast, and those of his clients didn’t appear to be, either.

Reuters spoke to 13 executives in charge of China operations at international firms, and nine said they felt they were operating in an environment where the economy was growing between 3% and 5%.

The nine included those from the banking, consumer goods manufacturing, advertising, heavy machinery and commercial property sectors.

One executive at a shopping mall operator said he was seeing flat sales growth compared with a year earlier, while three in the education, healthcare and e-commerce industries said revenues were still growing in double-digits.

Zhou Hao, senior economist at Commerzbank, said it wasn’t only businessmen struggling to see 7% growth. “Many traditionally reliable indicators such as power output and rail freight have shown a serious deviation from GDP growth,” he said.

“Nobody knows what’s the real economic growth.”

China’s economy grew 7% in the second quarter, according to the National Bureau of Statistics, and the government expects full-year growth to be about the same.

To be sure, there are pockets of the economy, such as education, healthcare and entertainment, where growth momentum remains strong.

Official retail sales data through August are still up more than 10% from a year earlier, though signs are emerging that consumer spending is slowing, spooked perhaps by the summer’s sharp declines in the stock market.

Xie Zongyao, chief operating officer at Shanghai’s Super Brand Mall, said sales had shown a slowdown over the past two months after posting double-digit growth in the first half of the year.

E-commerce giant Alibaba Group Holding said earlier in the month it expected its total value of transactions, one of the most closely-watched metrics for e-commerce companies, to be lower than previously thought in the July-September quarter because of lower spending.

Growth in China’s auto market, the world’s biggest, slowed to a standstill in August, compared with 7.7% growth a year earlier.