China's "old economy" still drives its "new economy"

China's economy supposedly deteriorated in Q3 because its "old economy" led the alleged recovery while the "new economy" sputtered. Or not?

Perhaps some analysts are still overdue for a bit of clarification on just how "old China" relates to "new China", i.e. how the former still largely drives the latter:

The undeniable trend has been that so goes Chinese industrial production, so goes Chinese consumption - a fact that no less than some of the most bearish China analysts are especially keen to stress. A two-month lag seems plausible from the above chart: since industrial production struggled back in the May to July stretch (after the initial effects of the Q1 stimulus wore off in late April), it's not surprising that retail sales struggled in the July to September period of Q3; by the same token, however, the pickup in industrial stats in Q3 seems to have been driven by rebounds especially in August and September, so this could well be a harbinger for stronger Q4 retail and consumption figures.

So it's not a bad thing that "old China" seems to be leading the nascent recovery: it very much has to.

Besides, it's not like either industry or retail are expected to improve to anywhere near their previous highs in the chart - the government's goal of an "L-shaped" recovery doesn't call for it, but rather a plateauing that's already exhibited in the chart's right-hand side for both data series (making for an "L" with a sliding diagonal trunk).