THE Chinese economy has a habit of beating expectations. For ten years in a row, from 2001 to 2010, its growth rate exceeded the IMF’s spring forecast, often by a big margin. But this year it is likely to disappoint. In recent months, industrial output has slowed sharply; stocks of unsold goods are piling up; and Shanghai’s stockmarket is at a three-year low. For the first time this century, in 2012 China’s growth rate may dip below 8%. With the world ever more dependent on China’s economy, that is worrying.

No economy can grow by double digits forever. As China’s economy matures and its labour force peaks, it is only natural that its pace of expansion eases. But the slowdown of recent quarters is cyclical, not structural, reflecting a loss of puff, rather than a shortening stride. China has seen a sharp drop in demand, as export sales fall and residential investment falters.

Some of the global headwinds buffeting China were foreseeable (see article). Nonetheless, most economists assumed the country’s policymakers could quickly revive growth if necessary. In China , in contrast to Japan or America, interest rates (and bank reserve requirements) have plenty of room to fall. China has an enviable amount of fiscal leeway. And its property slowdown largely reflects government curbs on speculative homebuying that officials could lift, if they so chose.

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