Big Data Reveals the Real Picture of China’s Economy, but Can It Survive?
Wu Haishan was at Princeton studying how schools of fish swim together when the crowd behavior of a much bigger group grabbed his attention: his 1.35 billion fellow Chinese.
It was Lunar New Year back home in 2014, and Baidu, operator of the country’s biggest search engine, had created an animation showing all the trips the Chinese had made during the holiday, which demographers say is the largest annual human migration anywhere. Wu, who’d seen the animation, soon joined Baidu as a data scientist in Beijing. With the company’s vast amounts of user location information, he’s come up with ingenious ways to measure economic activity.
Big-data gurus such as Wu are providing a sharper picture of China’s economy than government statistics, which can be twisted to fit the state’s agenda or remain frustratingly incomplete. “We were running around pointing a flashlight at various things like labor or ports,” says Jeffrey Towson, a professor of investment at Guanghua School of Management at Peking University. “This new information is like turning on the lights, and you see everything.”
Baidu handles 6 billion searches a day and dominates mobile mapping. The data show, for example, how many people visit Apple’s Chinese stores, which can signal interest in the next iPhone. Wu used the search and map data to find so-called ghost cities—where dozens of new apartment and commercial buildings stand empty—betrayed by a lack of mobile phone activity. He and his team have devised gauges of mall traffic, tourism, and industrial and high-tech employment.
“We didn’t know if there was any commercial value,” Wu says at Baidu’s campus in northwest Beijing. It didn’t take long to find out: Institutional investors quickly discovered Wu’s gauges after they were released in June. Baidu has rivals as well. Alibaba reported 3.1 trillion yuan ($450 billion) of online shopping in the last fiscal year, almost equal to Sweden’s gross domestic product. Cheng Xin, who works at Alibaba’s research arm, is developing a measure of the overall economy based on readings from its Taobao e-commerce platform and data it buys from other companies, such as transaction figures from Soufun.com, China’s biggest real estate web portal.
Wang Zhanwei, a data analyst at Didi Chuxing, China’s answer to Uber, says such information can benefit the government. His team plans to mine its ride-hailing data to figure out consumer spending by tracking how often people visit such places as malls, movie theaters, and karaoke bars. “Governments may plan cities better when they know more about how people commute,” Wang says.
Officials are paying attention. “We welcome and are open to big data,” says Sheng Laiyun, a National Bureau of Statistics spokesman, adding that the agency includes some of the data in tracking retail sales, consumer inflation, and home prices. So far, the new gauges mostly verify official statistics, according to Bloomberg Intelligence economists Tom Orlik and Justin Jimenez, who compared the statistics bureau’s numbers with private counterparts. “Will the government allow this to flourish?” asks Andrew Polk, head of China research at Medley Global Advisors in Beijing. “If they start showing things starkly at odds with official data, that’ll be a real test.”
The bottom line: Companies are using big data to give a fuller picture of China’s economic life, including mall traffic and tourism.