Expect the gloom and doom merchants to change their predictions about China’s slowing economic growth will deliver ruination to Australia. China’s third quarter economic growth figures will be released later today and possibly the September inflation figures tomorrow or Wednesday. Chinese growth is expected to drop under a 10% annual rate and Australia’s inflation will fall to an annual figure of between 3% and 4%.

But the AMP’s chief economist Dr Shane Oliver is one who doesn’t see gloom and doom in the forthcoming Chinese statistics. He said in a his weekly market note that the Chinese economic data will be watched closely for indications as to how fast it is now slowing down.

Having just returned from China I must say that while China is in far better shape than the US its economy nevertheless looks to be cooling significantly on the back of slowing exports and a property slump. Pretty soon we will be talking about China’s factories exporting deflation to the world again, after the silly “China is now exporting inflation” fears that were doing the rounds earlier this year.

Economic growth will be down on the 10.1% in the second quarter and more than 11% a year ago as steel and other exports slow and demand for a widening range of products slows.

China’s Cabinet made a rare public statement on the economy yesterday, saying the economy can weather the effects of the global financial turmoil. But it also said that growth will decline as the expansion of business profits and public revenue slows.

The State Council said in a statement at the end of an executive meeting led by Premier Wen Jiabao that the turmoil and economic instability will have a “gradual” effect on the country. It said China’s economic growth will slow along with corporate profits and public revenue, and as capital markets continue to fluctuate.

Newsagencies said that the statement said “Unfavourable international factors and the serious natural disasters at home have not changed the basic growth situation of our country’s economy,” said the statement posted on a government website. “Our country’s economic growth has the ability and vigour to resist risks.”

China must “adopt flexible and cautious macroeconomic policies” to maintain stable growth, the statement said.

Economists have cut China’s growth forecasts to as low as 9% for the year, down from last year’s 11.9% (it was over 12% in the middle quarters of last year).

Forecasts seem to be around the 9.7% mark for annual growth in the third quarter: that’s about the level that the International Monetary Fund has forecast for China next year.

Steel prices in China have fallen about 20% and there are reports of small steelmakers being forced to close because of shrinking demand. Mount Gibson, our fourth biggest iron ore exporter, has found that some buyers won’t take iron ore shipments and on Friday Fortescue Metals revealed that it had been forced to renegotiate iron ore contract prices downwards because of the slump in China. Ian iron ore exporters have had similar problems.

China’s trade surplus in September was a record: more than $US29 billion and that came despite a drop in steel exports. But that figure is likely to be the high point.