Is China’s data reliable?
With official figures showing the Chinese economy grew by 7.7 percent in the first quarter of 2013, a so-called slowdown or ‘soft patch’ in the Chinese economy has concerned some marketeers. Whether gross-domestic-product calculations involve macro data or micro data, the overall picture is not so clear, though some say a focus on regional numbers, cement, oil and gas usage would help complement official statistics.
Kang Qu, assistant vice president of research at the Bank of China, said at a panel discussion earlier this week organised by the centre for the study of financial innovation, and supported by NowCasting,
on calculating official Chinese data there is not so much government focus as in other countries on business confidence indicators but more on GDP prints, which are still under some doubt:
This is a reference when the People’s Bank of China makes big decisions.
Difficulty in collating accurate data is perhaps not so surprising, given the rapid urbanisation of the world’s second largest economy. Off-beat labour statistics (employing dissimilar methodology to the ILO
) are partly skewed due to a large number of temporary registrants that slip the official statistics net.
The solution? Jinny Lin at Standard Chartered, who thinks China’s real GDP level is more likely around 5.5 percent, suggested this could be taken from the history books. Emperor Yongzheng, China’s ruler in the late Qing dynasty, set up an independent body to look at data at the local level, and successfully stemmed tax evasion.
If local data is reliable enough, we should use local data.
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Problems are found at a local level too, however. While the current system sets local government officials’ bonuses for better GDP growth, there is no penalty for supplying incorrect data, neither are local government officials assessed on the jobs they create but via a points system. Instead local governments have ‘soft’ and ‘hard’ targets to attain, according to the panellists, some of which include environmental targets.
Then there is the issue of language. Some say data is more detailed in the Chinese language than in English, though official translations help bridge this gap. Quandaries remain, the resolution is still far from clear.