Economic policy is always challenging to decipher in China, where Communist Party leaders steer one of the world's most opaque central banks. Indeed, one measure of uncertainty has never been higher amid complications from Hong Kong's politics to Donald Trump's protectionism.
The China-Hong Kong Economic Policy Uncertainty Index stands at a record 672.82 after soaring to more than five times its average in data stretching back 22 years.
The gauge tracks mentions of policy-related economic uncertainty in Hong Kong's main English-language newspaper, the South China Morning Post. It's part of a suite of trackers developed by Northwestern University’s Scott Baker, Stanford University’s Nick Bloom and Steven Davis from the University of Chicago.
"There are some unique aspects of Hong Kong's relationship to China, and they've come to the fore," Davis said. "There are a lot of sources of policy uncertainty for China. Trump is definitely in the mix. There's also been a rise in protectionist sentiment around the world that has huge potential consequences for China given its reliance on exports. That's an externally driven source of uncertainty, and it's the kind of thing our index is designed to pick up."
China's less-certain outlook isn't alone. January data shows the global uncertainty gauge is also well above last year's average level.
Baker, Bloom and Davis pull their global indexes from a wide range of publications, but they limit China's to the SCMP because mainland news is controlled by the government. The gauge is constructed from a count of articles that include words or phrases referencing four criteria: China, economy, uncertainty and policy.
"The indices we construct have a lot of strengths and weaknesses," said Davis, a professor of economics at the University of Chicago's Booth School of Business. "One of the strengths is they can capture anxiety about things that don't show up in standard statistical sources."
— With assistance by Jeff Kearns