Every time a child says (s)he doesn’t believe in fairies, a fairy dies. China bulls are likewise endangered, since each set of poor economic data makes it harder to believe that a pick-up is round the corner. Earlier this year, optimists thought the slowdown in China would be slight. That evolved into a first-six-months-down, second-half-recovery story. Nearing the end of the third quarter the numbers are worsening.

Manufacturing activity data for August were unambiguously bad. Both purchasing managers’ indices – the official one and the HSBC one – were below 50, indicating contraction. Companies large (the official survey) and small (HSBC’s survey) felt the effects. This is not a case of waiting for official stimulus to trickle down from the big groups. Some of the blame can be laid on the weak global economy, namely the slowdown in the west and its damping effect on demand. But that is not the whole story.

Take new orders, which shrank further last month. Yet new export orders were unchanged. In other words, the slowdown this time was domestic. That makes policy action even more likely. Markets brightened on the mere possibility. But that is short-sighted since the slowdown has exposed a bigger, structural question for investors: has corporate China learnt to manage production for anything other than boom-year breakneck growth? The growing stockpiles suggest not: the build-up among Hong Kong giants and smaller Chinese groups is worse than in the post-Lehman slump. It looks even more ill-disciplined next to regional competitors.