Japanese rebound losing momentum, China slowing too?

Japan's recovery looks as though it is starting to sputter again. Bloomberg reports:

Japan's household spending fell for a third month in July, retail sales slumped and unemployment unexpectedly rose, suggesting a rebound in the world's second- largest economy is losing momentum.

Spending by households headed by a salaried worker dropped 3.5 percent from June, seasonally adjusted, the statistics bureau said today. Retail sales fell 2.2 percent in July, the trade ministry said. The jobless rate rose to 4.4 percent from 4.2 percent, as more people sought work.

Japan may not be the only major Asian economy facing a slowdown. Yesterday, there was a report that economists in China are getting concerned over a looming slowdown.

While China has spent two years battling to rein in its runaway economy, senior economists and government advisers now warn the economic powerhouse needs fiscal spending if it is to avoid a looming slowdown. Despite impressive headline numbers, there are big underlying problems which need to be confronted, they say. They echo calls to relax China's fiscal stance, dust off the policies of former premier Zhu Rongji and start issuing a greater number of treasury bonds to finance public works, helping to mitigate what they say is a dangerously slowing economy.

Cooling import growth, worryingly low inflation and shrinking industrial profits all suggest the expansion which began in earnest three years ago is under threat said He Fan, a researcher with the Chinese Academy of Social Sciences (CASS) and adviser to the government on economic matters.

But the AFP report also noted:

Yet first half gross domestic product data and July indicators clearly underlined there was little real statistical evidence of a slowdown. The debate about economic stimulus, it seems, remains just that.