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China’s Economic Data

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China’s economy is a lot to wrap a mind around. It’s huge, the world’s second-largest. It’s changing fast. “Transparency first” is not exactly China’s national motto. Everyone from investors to central bankers and executives nevertheless have plenty of compelling reasons to strain to understand it. To do so they have to parse official output statistics so notoriously enigmatic that even China’s Premier, Li Keqiang, once said he prefers not to rely on them. That was putting the situation politely. Bill Gross, the renowned bond-fund manager, was blunter: He called China “the mystery meat of emerging-market countries.”

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 gross domestic product for 2015 of $10.4 trillion. But the sum of the GDP reported by China’s 31 provinces was about 6.9 percent more. The discrepancy 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. At least the gap is getting smaller, perhaps indicating improved data quality. 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 270 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. That approach would be partial at best now given how services have expanded to make up more than half of the economy. Some analysts say China may even be undercounting GDP due to the difficulties measuring the services sector. Meantime, Liaoning government officials have admitted fabricating fiscal revenue data in order to advance their careers.