Investors hoping the corporate earnings season would signal a turning point in China's economic slowdown have been largely disappointed, with big manufacturers joining consumer companies to warn of flagging sales in the world's No.2 economy.
Whilst the latest quarterly results deluge has delivered some positive surprises - with U.S. industrial companies mostly reporting a better-than-expected performance at home - the motor of global growth in recent years continues to stutter.
Siemens , Europe's biggest engineering conglomerate, BASF , the world's top chemicals maker, U.S. blue chip United Technologies and Japan's Hitachi <6501.T> have all felt the effects of lower Chinese demand.
"The Chinese growth engine has started to stall leading to a decrease in BASF's sales in local-currency terms in Asia," said Chief Executive Kurt Bock, after the German firm reported it had not received any major orders from China this year and expected economic growth in the country to remain subdued until year-end.
The readout from China's official purchasing managers' index was weaker than expected on Wednesday, suggesting the country's vast factory sector barely grew in July, with new orders contracting more deeply than in June.
For a glimpse behind the official data, a good place to start is with the companies that make up the manufacturing backbone of Germany and Japan.
Chinese factories buy much of their machine tools and equipment from German firms, while Japan is one of the few advanced economies to generally run a trade surplus with China.
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POCKETS OF STRENGTH
The picture is not uniformly gloomy, with niche manufacturers in both countries reporting pockets of strength.
"Our high-tech products are especially in high demand with customers producing for the domestic market," said Mathias Kammueller, managing partner of Stuttgart-based Trumpf GmbH+Co KG, which makes machine tools, power tools and laser technology for precision welding and cutting. "More export-oriented customers in China are a little cautious."
Cologne-based engineering company Schuette, which makes precision cutting tools, was also upbeat on China, and Japan firms like saw and grinder maker Disco Corp <6146.T>, industrial tool maker THK Co <6481.T>, and robot maker Yaskawa Electric Corp <6506.T>, all expect annual sales in China to grow again.
"Investments being made around smartphones and tablet computers, for us that's small-sized machine tools, are good," said a THK official. "But demand for mid-sized machine tools, the kind used in auto production, and large-sized machine tools, used for infrastructure projects, isn't back yet."
But bigger companies painted a gloomier picture, with major industrial firms in Germany and Japan joining the likes of U.S. machinery maker Caterpillar and British fashion label Burberry in warning of weaker Chinese sales.
Peter Loescher, chief executive of Siemens, said that conditions in China were more difficult as major orders had become rare, and that he expected the trend to continue at least until the end of 2012.
Hitachi said construction equipment sales in China slumped more than 40 percent in the first quarter and saw little improvement this year, while Komatsu Ltd <6301.T> said second quarter sales hydraulic excavators and other construction equipment in China dropped year-on-year by about half.
"We think it will take until at least January for demand to recover in China's construction equipment market. This is not just the case for our Hitachi Construction Machinery, but also for Komatsu and Caterpillar," Hitachi Executive Vice President Toyoaki Nakamura told reporters.
COMMODITIES SIGNAL
Komatsu's U.S. rival Caterpillar has already scaled back Chinese production - although a 31 percent rise in North American sales allowed it to report better-than-expected earnings - while United Tech lowered its sales forecast for its Otis Elevator Company, largely due to weakness in China.
Commodities are also signalling a more prolonged downturn, particularly from the construction sector that has fuelled China's ravenous appetite for iron ore, steel and copper over the past decade.
China's steel mills, plagued by over capacity, saw profits plunge by 96 percent in the first half of 2012 from a year earlier as prices plumbed record lows.
Slowing Chinese demand has been blamed for benchmark international iron ore prices falling to a two-and-a-half year low and London copper prices are about 13 percent off their February peak.
China's demand for coal has also weakened, with Chinese traders scrapping import deals for at least 2 million tonnes of coal in July due to plentiful supply.
At 7.6 percent, China's GDP growth in the second quarter was its weakest in more three years and the government has set a modest growth target for 2012 of 7.5 percent, after registering expansion of 9.2 percent in 2011.
Weakening economic data prompted China's central bank to cut interest rates in June for the first time since the global financial crisis, alongside other monetary easing steps designed to boost banking lending.
The policy response has prompted hopes from investors and companies that, with a once-in-a-decade leadership transition due to begin before the end of the year, Beijing will take further steps to stimulate the economy.
"Demand for construction equipment in China will not rise without direct investment," Komatsu President Kunio Noji said during a conference call about the earnings. "Our view is that (monetary easing measures) are not enough to stimulate a recovery."
But although the government has speeded up approvals for new projects, it has vowed not to repeat the massive 4 trillion yuan stimulus package it unleashed in response to the 2008/09 financial crisis.
That will disappoint those hoping for another investment splurge to deliver an unambiguous boost to the economy.
"I don't believe in government statistics," said Sun Hongbin, Chairman and CEO of Sunac China Holdings Ltd, a mid-sized Chinese developer. "You need to look at government policies. It's vital to boost consumption."