The recent decline in year-on-year (y/y) growth rate has sparked fear of a China ''hard landing''. However, the literature found that y/y measures can be inadequate in catching cyclical turning points, especially when, as now in China, a short, sharp deceleration has occurred but bottomed out within the past 12 months. We regard three-month/ three-month seasonally adjusted annualized growth rates (QSAA) as a better leading indicator for identifying patterns than y/y growth rates given that QSAA not only irons out very short-term volatility by taking a three-month moving average, it summarizes information from the previous six months (y/y indicators only exhibit the latest data point and information 12 months ago). Based on a sample of six important Chinese economic indicators, we find the new measure shows a different growth trajectory relative to that measured by the y/y growth rate. Thus, policy makers may find the new measures complementary to the widely used y/y growth rates in decision making.
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