If there’s one topic guaranteed to spark fierce debate among investors it’s the reliability of Chinese economic data. Short lag times between the end of a survey period and report production, along with a mysterious knack of almost always printing at-or-around market consensus, are just two of the frequent arguments heard among those who believe it is largely fabricated.
In an attempt to improve the international perceptions of the nation’s economic data, China’s central bank, the PBOC, announced yesterday that it will conform to the special data dissemination standards (SDDS), a statistical system created by the International Monetary Fund (IMF) to improve transparency.
“With approval from the State Council, China’s cabinet, People’s Bank of China (PBOC) Governor Zhou Xiaochuan informed IMF Managing Director Christine Lagarde of China’s decision,” said the state-run People’s Daily newspaper.
Since 2002 China has used the IMF’s general data dissemination system (GDDS), set up by the fund to provide a framework for countries to adapt and improve their statistical systems. The decision to adopt SDDS standards applies to countries that have, or are looking to achieve, access access to international markets – something that China is clearly looking to achieve by having the renminbi added to the IMF’s special drawing rights (SDR) currency basket, a decision the IMF may grant the currency as early as November this year.
“The adoption of SDDS is a necessary step in reform and opening up, which will further improve China’s statistical transparency, credibility and comparability among different economies,” the PBOC statement read.
“We are committed to strengthening our statistical system and enhancing transparency, as this is not only crucial for our own policy making, but also beneficial for a better understanding of the Chinese economy by the outside world,” said Yi Gang, deputy governor of the PBOC.
While it’s unlikely that PBOC announcement will do little to sway staunch China data sceptics, the adoption of statistical data standards already used by developed nations such as the US and Australia is a welcome step.
China’s economy is the second largest in the world, and is likely to replace the United States at number one within the decades ahead – it’s time that the transparency of the data to reflect that.
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