China GDP Release Guide: What to Watch for Beyond the Headlines

China's Exports
A container ship leaves the Yangshan Deep Water Port in Shanghai. China’s exports surged in February and then slumped in March. Photographer: Tomohiro Ohsumi/Bloomberg

China’s economic growth rate probably slipped in the first quarter to the slowest pace since the global recession of 2009, if analysts have called it right.

The nation’s gross domestic product report for the three months through March released at 10:00 a.m. on Wednesday in Beijing will show growth slowed to 7 percent from a year earlier, according to the median estimate of economists surveyed by Bloomberg News.

For an under-the-hood look at how the world’s second-largest economy is faring, keep an eye out for these nuts and bolts that are also scheduled for release Wednesday:

1. Will industrial activity show a deeper slowdown?

Industrial production, released at the same time as GDP, is forecast to grow 7 percent in March from a year earlier. A weaker reading would raise questions over the durability of a recent stabilization in the official Purchasing Managers’ Index.

Electricity output, watched by Chinese Premier Li Keqiang, has seen its power fading, rising just 1.9 percent from a year earlier in January and February combined.

2. What’s the deal with exports?

China’s exports surged in February and then slumped in March. What’s going on? Wednesday’s report may clear that up.

The nation’s biggest exporters, accounting for about 85 percent of shipments, report the value of goods delivered in a figure that’s typically less volatile and clear of the effects of fake invoicing or the crackdown on that practice. It can be found in the same statement as industrial production.

3. Will the GDP deflator fall below zero?

Central bank Governor Zhou Xiaochuan said last month the country needs to be vigilant about deflation risks. He’ll no doubt be among the many who crack out their calculators to crunch the gap between nominal GDP (unadjusted for inflation) and real GDP (adjusted for price changes) which gives the indicator of economy-wide inflation. The GDP deflator might fall below zero for the first time since 2009, according to analysts at China International Capital Corp.

“In China, when CPI falls below 1 percent it is virtually deflation, because enterprises will have no initiative to make investment and expand capacity,” Chen Xingdong, chief China economist at BNP Paribas SA in Beijing, said last week after a report showed the CPI rose 1.4 percent in March from a year earlier.

4. What’s happening to the universe’s most important sector?

Dubbed the most important sector in the universe, the property industry makes up about a quarter of the country’s GDP, according to past calculations from UBS Group AG.

Real estate development investment, indicating the confidence developers have in future sales, will be released as part of a statement of fixed-asset investment. The rate slowed to 10.4 percent in the first two months compared with a year earlier. It will slow to 7 percent this year, Yu Bin, a researcher of Development Research Center of the State Council, said last week.

5. Will China add enough jobs to weather the slowdown?

In what could be the most important number of all in Wednesday’s data deluge, a spokesman for the statistics bureau will probably announce figures showing new job creation.

Thanks to the services sector, which generates more employment compared to manufacturing, China added 13.22 million new jobs last year in urban areas, well above the 10 million target even as the economy slowed. Income growth of urban and rural residents will also be released at the briefing.

Why the importance? Premier Li last month said policymakers will step in to support the economy if the slowdown starts to hurt jobs and wages.

6. Is China rebalancing?

The statistics bureau breaks China into three sectors, agriculture, manufacturing and services. The share of services has been steadily increasing, rising to 48.2 percent in 2014.

Another breakout to watch for is how much investment, consumption and net exports contribute to GDP growth. In 2014, consumption accounted for 51.2 percent of the economy’s expansion.

— With assistance by Xiaoqing Pi

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