Englander isn't alone in looking to Australia to get a reading on China. Frederic Neumann, co-head of Asian economics at HSBC Holdings Plc in Hong Kong, said his team studies iron-ore exports, while Saul Eslake, chief Australia economist at Bank of America Merrill Lynch in Melbourne, said he tracks what mining executives say and monitors iron ore and coal shipments.

Diverging Gauges

Divergent indications on manufacturing underscore a lack of clarity in the world's second-largest economy's direction. While an official Purchasing Manager's Index has held in a tight range since October, a similar gauge published by HSBC and Markit Economics shows wider swings. The government's PMI also contrasts with concern flagged by stocks, with the Shanghai Composite Index down about 7 percent this year.

"You look at the equity market, you look at the way people think about China's economy, you look at economic growth, even if you look at the official industrial production numbers, the range has been a lot wider," said Ken Peng, senior economist at BNP Paribas SA in Beijing. The government is trying "to create a sense of stability, and I think it does just the opposite. It loses credibility," he said.

China's export gains collapsed in May after a crackdown on fake invoices used to disguise money flows that inflated data in the first four months of the year. In July, China suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there's limited time to analyze the large volume of responses.

"There is no smoking gun that suggests the numbers are directly manipulated," said HSBC's Neumann. "They may probably not be terribly good, all of them, but I wouldn't say that they're systematically manipulated."

Confusion about China's growth goals was highlighted when Finance Minister Lou Jiwei told reporters in Washington on July 11 that a pace as low as 6.5 percent may be tolerable in the future. State-run Xinhua later amended the English-language report on Lou to say there's no doubt that China can achieve this year's growth target of 7.5 percent. Premier Li said last month 7 percent was the "bottom line" rate for the nation.

7% Pace

Even so, Englander, who previously worked as an economist for the Federal Reserve Bank of New York and the Organization for Economic Cooperation and Development, estimates some risk of a dip below 7 percent for a period. He sees GDP rising 7 percent next year and in 2015.

The implications are that the Australian dollar, which has fallen more than 12 percent since the start of April, to about 91 U.S. cents, has more room to fall, according to Englander. "We suspect it will take 85 cents or below for international investors to think that a major stabilization has occurred."

Elsewhere in the region today, India's wholesale price index rose a faster-than-forecast 5.79 percent in July, and retail sales in New Zealand advanced 1.7 percent in the second quarter from three months earlier. In Europe, the German economy expanded 0.7 percent in the second quarter, more than economists had predicted, while in the U.S. a reading of wholesale prices for July is due.

Australia's links with China tightened in recent years as exports to what's now its largest trading partner almost quadrupled in five years. The central bank has one of three international offices in Beijing—solely for economic analysis, rather than for trading, which is the main function of the New York and London locations. The RBA, which has noted the increasing correlation with China, has a team of about 10 analysts to focus on China and India.

The RBA said Aug. 9 that recent Chinese growth rates have been "somewhat less than previously expected, reflecting a weaker contribution from external demand and diminished prospects for an upswing in domestic demand."

Governor Glenn Stevens cut Australia's benchmark interest rate on Aug. 6 to a record-low 2.5 percent, seeking to boost non-mining areas of the economy. The bank last week also trimmed its projection for Australian GDP to a 2.25 percent gain for 2013, from the 2.5 percent pace estimated in May.

The central bank pared the outlook for mining investment, saying that while the local statistics bureau's capital expenditure survey showed expectations remain strong, "this is inconsistent with information from the bank's liaison, few new commitments to mining projects and a lack of current expenditure on the development and planning work that would typically precede new projects."

Election Pitch

Rudd, a Mandarin speaker and former diplomat in Beijing, has put the case of a China slowdown more starkly than his central bank governor as he campaigns ahead of elections on Sept. 7—flagging the danger of an Australian recession should opposition leader Tony Abbott win power and execute pledged fiscal tightening. The Treasury yesterday said the peak in resource investment will be lower than forecast in May, citing uncertain global prospects, particularly in China and India.

BHP Billiton Ltd., which is based in Melbourne and is the world's biggest mining company, is targeting an 18 percent cut to capital spending in fiscal 2014, joining Glencore Xstrata Plc in deferring projects and cutting back on outlays. Glencore in May said it halted work on a 35-million-metric-ton coal port in Australia, while Woodside Petroleum Ltd. in April scrapped a plan to build the Browse liquefied natural gas project at a site on the Western Australia coast because it was too expensive at an estimated cost of about $45 billion.

Even so, Australian evidence isn't all stark, and it underscores the unlikelihood of worst-case scenarios such as one at Barclays Plc where GDP growth dips to 3 percent for a time. Neville Power, chief executive officer of Fortescue Metals Group Ltd., said in an interview Aug. 5 that underlying demand for iron ore from China remains strong. BHP Chief Executive Officer Andrew Mackenzie said in an Aug. 7 interview he's "reasonably positive" about the nation.

"They're doing a good job at rebalancing and moving more towards a consumption-based economy and at the same time thinking more deeply how they can make more efficient use of the resources that we sell to them," Mackenzie said in Melbourne. "Urbanization will continue, and so we're looking in the next 10 or 15 years at the possibility of another 250 million Chinese moving from the countryside into the city."

'Well Informed'

BHP executives are "well informed," Merrill Lynch's Eslake said. "It's sensible to have an ear out for what they say."

Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., uses natural-resources data, such as iron-ore shipments from a remote port in Australia's northwest, to help form his estimates of Chinese activity.

Among his favored indicators are Port Hedland iron-ore shipments, which climbed to a record in May and held near there in June—presaging an unexpected 10.9 percent July surge in Chinese imports. It takes about two weeks for ships to travel from northwest Australia to China's Qingdao, the nation's biggest port for such imports.

"Chinese data gives you a rough guide as to how things are going, but you wouldn't rely on it as much as data from Australia or the U.S," said Oliver, who travels to China twice a year and plans October for his next visit. "The fact that the data comes out so quickly after the end of the period that it relates to, such as the quarterly data coming out within a few weeks of the end of the quarter, suggests that it's pretty rough."

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