Wednesday, November 30, 2022
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If you don’t know where you are, how do you know where you are going? (China Statistical Edition)

The issue has become increasingly important as China reduces its statistics release.from Byrne Murdoch of the Financial Times:

In this context, one can view the recent delay in the release of third-quarter GDP as a symptom of the ongoing disintegration of the technocratic element of China’s economic management. We may have to rely increasingly on alternative methods of estimating economic activity in China, such as satellite imagery illuminated at night, or reporting an alternative combination of economic indicators (the Li Keqiang index).

To recap, here are the nowcasts and forecasts of reported GDP (that is, trying to predict what official gross domestic product will be reported as, not what actual activity probably), from this postal.

figure 1: China GDP (black), Bloomberg consensus as of 10/17 (sky blue squares), Goldman Sachs (brown triangles) as of 10/11, and IMF October 2022 World Economic Outlook forecast (red squares), RMB 2020 million RMB, quarterly interest rate. ECRI peak-trough recession dates are shaded in gray. resource: International Monetary Fund, International Financial Statistics, Bloomberg (17 October 2022)Goldman Sachs “Top of Mind” (10/11) and IMF World Economic Outlook, October 2022, ECRI, and author’s calculations.

While some observers have pointed out that in recent years, China’s economic cycle frequency of GDP changes has been in line with other indicators, there has been some skepticism in recent quarters (see this postal).

In some respects, the problems created by the reduction in reporting of low-frequency metrics will make it harder to assess trend output, see Martinez (2022) Figure 6 shows that during the period 1992-2012, China’s official growth rate was close to 200%, compared with an estimated 120% based on satellite data (second bar from left in panel (a), third bar from left (b) )).

resource: Martinez (2022), Ungated Working Paper Version.

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