Flat is the new up for China

Third quarter GDP came in at 6.7 percent, in line with analyst expectations and keeping a perfectly flat 6.7 percent clip for all quarters of 2016 so far, but some caveats are in order.

After year-on-year monthly GDP of 6.9 and 7.2 percent for July and August, the year-on-year figure for September must have been comparatively very low to drag down the overall Q3 print to 6.7 percent.

The industrial recovery which has powered the economic stabilization since last winter looks fragile. Year-on-year industrial output was back down to 6.1 percent in September, well below the projected 6.4 percent; while this may be a temporary blip, it underscores fears of the unsustainability of growth that's still largely dependent on secondary industry (manufacturing and construction), even as tertiary industry (consumption and services) account for a greater portion of new economic activity. Indeed, as is the case with all economies, secondary industry drives tertiary industry - after all, that's what makes them secondary and tertiary to begin with.

Encouraging signs are still to be found, though: both fixed-asset investment (8.2 percent) and retail sales (10.7 percent) in September beat estimates by 0.1 percentage point; the latter in particular points to good Q4 consumption and services performance that should again compensate for declining industrial and investment growth, at least until Q1 2017, by which time Beijing may need to ramp up more targeted fiscal and policy support for its secondary sectors. By then, however, the hope is that the gloomy global economic and especially trade outlook will have brightened with the political uncertainty in the West having eased or at least plateaued from the current downward trend.

The yuan and Chinese stock market seem to be neutral in the wake of the latest news, and PBOC's earlier floor of 6.8 to the dollar through year-end appears to remain in place. Flat is the new up for China - and more generally for the global economy in the present environment, as well.