Earlier this week China’s government released its latest quarterly GDP growth rate, reporting that the economy grew by 1.8% in the three months to September, leaving the annual rate of growth based on the quarterly figure at 7.2%.

On cue, the howls of doubt over the accuracy of the figure presented was heard across the markets. Given all of the data leading up to the release of the GDP report, how possibly could the economy be growing at such a quick clip?

Like Capital Economics’ Julian Evans-Pritchard, Diana Choyleva of Lombard Street Economics believes that the numbers were inflated, suggesting that the real growth rate for the economy during the quarter was less than half the rate reported by the government.

Here’s Choyleva on what rate the economy really grew in the September quarter, based on her own calculations.

“China’s real GDP data came in worse than we expected, raising the risk of a sharper downturn next year. Our preliminary estimates show growth at an annualised rate of just 2.9% in Q3, way lower than the official 7.2%. Year-on-year growth was 3.1% (official 6.9%). The Q3 number changed the seasonally adjusted profile of our quarterly annualised estimate, lowering it to an average of just 3.5% so far this year.”

The chart below from Choyleva reveals the vast disparity between the official seasonally adjusted annual growth rate released by the government compared to that calculated by Lombard Street.

During the quarter Choyleva suggests that net trade, along with services, helped boost economic growth, partially offsetting declines from heavy industry and construction which suffered from “massive overinvestment.” She also notes that the overvalued yuan “weighed on manufacturing.”

Looking ahead, Choyleva believes that external factors, rather than domestic, will determine whether growth can stablise in the quarters ahead.

“Whether Beijing will be able to stabilise growth in the next couple of quarters depends on American and European consumers starting to spend more of their real income gains”, she said.