Here's Some Fodder For The Chinese Economic Data Truthers

china pmiRed numbers highlight declines from June.

There is no shortage of economists who are sceptical of the data coming out of China, especially the data published by the Chinese government.

Indeed, China’s export numbers often don’t tie out with its trading partners import figures, and vice versa.

This brings us to today.

Economies around the world are publishing their PMI figures.  And across Asia, the numbers are deteriorating (the image to right is from Business Insider’s PMI scorecard). Even the HSBC China PMI number fell to 47.7 in July from 48.2.

Any number below 50 signals contraction.

However, China’s official PMI number, which is produced by the country’s National Bureau of statistics, unexpectedly climbed to 50.3 from 50.1 a month ago. Nine of 11 sub-indices increased, including new export orders.

What gives?

“The HSBC PMI sample is overly represented by small exporters which were hit by rising RMB, rising wage and sluggish global demand,” explained Bank Of America Merrill Lynch economist Ting Lu. “However, the official PMI is more represented by domestic big enterprises with large exposure to FAI. The improved sentiment will surely support the official PMI.”

That doesn’t explain the improvement in the official report’s export orders sub-index.

Here are some China-related quotes from the PMI reports:

  • Japan: “New export orders continued to grow, though at a mildly decelerated pace, which panellists attributed to the impact of the slowing Chinese economy and a consequent decrease in order volumes from customers.”
  • South Korea: “Falling demand from the Americas and China was mentioned by some manufacturers as a key factor.”
  • Vietnam: “China was noted in particular as a source of demand weakness during the latest survey period.”

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