China to Let World in on Gauge Showing State of EconomyBloomberg News
Chinese Premier Li Keqiang has an insider’s knowledge on the strength of the world’s second-largest economy that helps him determine when stimulus is needed. He’s about to share part of the secret.
Li has said several times this year that slower growth is tolerable as long as enough jobs are created, often referring to a survey-based unemployment indicator that’s different from the registered urban jobless rate released every quarter. The published gauge excludes migrant workers who aren’t registered with local authorities, estimated at more than 200 million.
The more comprehensive jobless rate will be released “very soon,” Sheng Laiyun, spokesman for the National Bureau of Statistics, said in Beijing yesterday. “The quality of the indicator, for now, looks very good. So, we are using it internally for policy decision-making references.”
China’s leaders have eschewed across-the-board stimulus and interest-rate cuts even as growth cooled to the weakest pace in more than five years last quarter, sticking to limited steps such as easing home-purchase controls. Having access to better barometers like the new unemployment measure would help economists estimate how deep a slowdown in gross domestic product the government will tolerate.
“The lack of good unemployment data is the main reason why China still focuses so much on GDP,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. “In fact, the government is more concerned about employment and inflation, and that’s why they refrained from big stimulus.”
Releasing the methodology, breakdown and samples for the new jobless rate in addition to the headline number, as the U.S. does, would also greatly help researchers, Zhu said. He called China’s current registered unemployment rate “untrustworthy and unusable.”
Sporadic revelations made by the government about the broader unemployment gauge, which surveys 31 cities, show about a 1 percentage-point divergence from the official rate this year. The surveyed rate fell for four straight months to 5.05 percent in June, the National Development and Reform Commission said on its website in July. In contrast, the official registered rate was 4.08 percent in the second quarter, unchanged from the previous three months.
The new surveyed rate adopts a methodology following the guidance of the International Labour Organization, according to Cai Fang, vice director of the government-backed Chinese Academy of Social Sciences.
“All eyes will be on it,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “It’s going to be really important, like that of the U.S.”
A monthly jobless rate could be a real barometer to take the pulse of the Chinese economy as GDP data is only released quarterly, Ding said. The survey is also directly conducted by the central statistics bureau, minimizing distortions by local officials to glorify their performance, the economist said.
There might still be flaws. Migrant workers would usually go back to their rural communities when they are laid off during economic downturns, which would be seen as exiting the labor force and not reflected in the unemployment rate, Cai said. The statistics bureau has compiled the surveyed jobless gauge since 1996, providing it to top policy makers such as the premier, Cai said, as “it fluctuated too much in different years and cities.”
The rate was 9.6 percent in 2008, when China’s coastal manufacturers were stricken by the global financial crisis, according to Cai’s estimate, which he said was close to the statistics bureau data based on checks with officials. In 2008 and 2009 the published registered rate ranged from 4 percent to 4.3 percent.
“After years of discovery, conditions are ready to publish the urban unemployment rate,” the state council said in a July 30 statement after Premier Li held a regular meeting. The survey scope will be expanded, the methodology will be improved and statistics bureaus will publish the data “at the suitable time to fully and actively reflect the unemployment situation,” it said.
Sheng said yesterday that the survey has been recently expanded to 65 cities and will be published after one year’s observation.
GDP rose 7.3 percent in the July-September period from a year earlier, the statistics bureau said yesterday, beating the 7.2 percent median estimate in a Bloomberg survey of analysts.
Employment indicators are better than expected in the first three quarters, Li said, according to a statement posted to the government’s website yesterday. The premier is full of confidence with regard to China’s economy, even as downward pressure and difficulties exist, according to the statement.
— With assistance by Xiaoqing Pi