China’s National Bureau of Statistics cobbles together data from many sources whose reliability is difficult to ascertain. The results can be eccentric. For example, the bureau reported a 2014 gross domestic product of $10.2 trillion. But the sum of the GDP reported by China’s 31 provinces that year is about $765 billion more. The discrepancy has narrowed and may be explainable — by double counting or by provincial officials inflating their figures because they are judged on the strength of local GDP growth — but the truth is elusive. Then there are dubious indicators of economic performance like the national jobless rate. It only covers urban residents who bother to register as unemployed and ignores more than 200 million migrant workers who frequently change jobs or get fired. Li said in 2007 that he judged economic performance (of Liaoning province, where he was party secretary at the time) through electricity consumption, rail cargo volume and loan growth. Looking at that measure, GDP growth in the first quarter of 2015 may have been in the low single digits. The government said GDP grew 7 percent, while Bloomberg’s monthly GDP tracker put the number at 6.5 percent.
The problem isn’t just politically motivated distortion of the sort that was routine under Mao Zedong. Because China’s statistics were designed to measure a Soviet-style planned economy, they do a reasonable job assessing output from centralized industries such as steel and automobiles. China hasn’t been able to keep up with the data requirements of the country’s modern, consumer-driven economy and lags in collecting information about service businesses such as small restaurants and karaoke bars. It’s making some efforts. The People’s Bank of China created an aggregate financing indicator, which includes traditional bank loans and seeks to measure activity in China’s $6 trillion shadow banking industry. The government also published a nationwide audit of local government debt in 2013 to address concerns about borrowing that local officials have relied on. No one really knows how much debt is at risk of default.
It’s tricky to get a clear picture of what’s happening in any fast-changing country. China’s economy is transforming from one that relies on exports and industrial production to one that seeks to satisfy the demands of its 1.4 billion consumers. So when it comes to economic data, interested observers have to pick and choose. Economists often resort to anecdotes, logic or their own measures. For example, Morgan Stanley judges Chinese industrial performance by means of an index composed of electricity and steel production, government revenue, exports and imports, and car sales. Skepticism rises when strong industrial output coincides with weak electricity use, or when China reports growth in overseas shipments while fellow Asian exporters like South Korea or Taiwan report declines. Data may not be reliable even if it comes straight from the top. What the government called a 4 trillion-yuan stimulus package launched in late 2008 proved far bigger than the headline number suggested. Back to meats: Like Bill Gross, the Credit Suisse economist Tao Dong has an informal processed-pork indicator. In February 2014, he noted that slower sausage sales during the weeklong Lunar New Year festival may mean China’s economic downturn was worse than it looked.
The Reference Shelf
- A 2013 paper by researchers at the U.S-China Economic and Security Review Commission looked at the reliability of Chinese economic data.
- A 2004 paper by the Hong Kong University social scientist Carsten A. Holz provides a rich narrative of the transformation of China’s statistics system.
- A Bloomberg TV report shows that skepticism about China’s economic data dates to the 1930s.
- “Myth-Busting China’s Numbers,” a book by Matthew Crabbe scheduled for release in May 2014, recommends ways to understand and use China’s statistics.