Chinese economic data isn’t as market-moving as it once was. If anything, it’s now largely overlooked by investors.
Be it GDP, PMI, CPI, trade or retail sales, among countless others, they barely create a ripple across financial markets nowadays.
That probably reflects a growing chorus of sceptism that rather than capturing what is happening on the ground, the data merely portrays what the government wants you to think is happening.
Matters haven’t been helped by reports that policymakers in some northern Chinese provinces were found to have fabricated growth figures in the years following the global financial crisis, overstating economic activity in order to meet goals set by the central government in Beijing.
Nor has credibility been enhanced by the unbelievable stability in the national figures with the annual growth rate reported by China’s National Bureau of Statistics (NBS) either meeting or exceeding forecasts by 0.1% in each of the past 10 GDP reports.
None have come in below over this period.
Given the swings seen in other major economies over the same period, the stability in China’s economy — the second largest in the world behind the United States — is not only uncanny but highly unusual.
When it looks too good to be true it often is, right?
Well, things may be about to change.
The days of flimsy economic growth data in China may be coming to an end, according to Sheng Laiyun, chief economist at the NBS.
In an interview with Bloomberg, Sheng said that Chinese authorities are taking several measures to enhance the veracity of the GDP reports, adopting the latest United Nations-based statistical standards, gathering more comprehensive data from a major census next year, and cutting local interference and double accounting by computing GDP for the provinces instead of relying on their own reports.
“China is cleaning up the environment for statistical work and ensuring that there’s no interference by officials,” Sheng told Bloomberg.
Sheng added that the NBS is also is working with government research institutes to better track the shifts in China’s economy composition, noting that a new gauge of the more vibrant, efficient, and high-tech parts of the economy will be released as soon as September.
While all positive steps on the surface, it’s debatable whether it will be enough to deter sceptisism that surrounds Chinese data.
Once trust is lost its hard to win back.
Perhaps an aberration in China’s annual growth rate of more than 0.1 percentage point, especially to the downside, may be the starting point for helping to turn the tide.
Bloomberg has more here.
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