Chinese Economics Thread

[AssassinsMace]

Interesting. If an outdated system was used and suspected that the Beijing was manipulating figures, why now do they use this new system to calculate to a correct figure? Were these the same people that when China was overheating charged that the figure was actually more that official Chinese figures? What Beijing does... is it really any different from what Western economies do? After all it was just revealed recently that the US has been in recession for over a year now. Something that was hidden from the public and the world by those that know. So they shouldn't get onto their high-horse so soon.

 

[Hendrik_2000]

It appears the decades long contention that China inflates its economic data is still there, but if that is the abundant situation, surely a forensic/accountant/economist would have been able to find irrevocable proof of it by now, than relying on insinuations.
The author makes a distinction of the different measuring methods used. Unless Im misreading the article the method used to measure growth was only applied to the last quarter? Nor does it tell us what the new method is or why its more reliable. Does anyone know how the west measure their economic performance.

The old trick if you don't like the message shoot the massenger Just because China doesn't follow western way of reporting quarter to quarter growth doesn't mean they lie
Compare to the year gone by they omprove significantly and employ huge number of people I don't know where the author of the article get his number But he is certainly wrong China employ 100,000 statistician
They might convert to quarter to quarter growth in the future instead year on year basis

Here the rebuttal from National Bureau of Statistic

Chief of NBS: China's statistics accurate and reliable

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2009-02-06 18:58:01 Print

BEIJING, Feb. 6 -- The first meeting of the Committee on Statistics under the United Nations Economic and Social Commission for Asia and the Pacific is being held in Bangkok, Thailand, from February 4 to 6. Ma Jiantang, Director of China's National Bureau of Statistics, is attending the meeting as the head of a delegation. He was interviewed by Ren Jianmin, a reporter from the People's Daily in Thailand, on February 5.

Ma said that upon the release of the final verified GDP for 2007, a debate was aroused in the international community.

The calculation of GDP statistics is a very complex process. The GDP accounting system in China consists of three steps: preliminary accounting, preliminary verification and final verification. Within the last 20 days of a year, preliminary accounting is calculated according to a data snapshot. In the middle of the following year, when annual reports and financial data are more comprehensive, a preliminary verified GDP is calculated after revisions are made. At the end of the year, the revised GDP for the previous year (or the final verified GDP) is made, based on final annual data and financial settlements.

GDP revision is an international practice. The collection of annual reports and financial data is completed step by step in all countries. The US makes five revisions to its annual GDP figure, Canada revises three times, and Germany makes four revisions.

In the fourth quarter of last year, China released its GDP growth rate as 6.8 percent. Following its release, two points of view emerged in the international debate.

One is that the official figure is higher than the actual growth rate. If China's power consumption registered a negative growth, how was it possible that the GDP growth rate was 6.8 percent? Such a question shows that people holding this point of view do not have much understanding of the way various factors of economic performance work.

The other view is that the growth rate has been underestimated intentionally, saying that the Chinese government has under reported last year's growth rate in order to lay the foundation for achieving the target of a 8 percent growth rate in 2009. However, these projections are purely subjective and are unfounded.

Even though China's statistics system still needs to be perfected, it is still relatively sophisticated for the Asia-Pacific region.

China's statistics system employs 100,000 staff workers and has investigation teams at the provincial and municipal levels under the direct jurisdiction of the National Statistic Bureau. Furthermore, China's statistics system is relatively comprehensive and its methods and standards are for the most part in line with the international community. Its ability to provide services for economic operations is also improving gradually.

(Source: People's Daily Online)

 

[Schumacher]

Yup, it's just too funny, many of these western 'journalists' are really acting like kids. When the 6.8% figures came out, many tried to paint it as being as bad using the strange old argument that anything less than 8-10% is recession for China. When this failed to gain traction & became increasingly clear it actually shows resilience, they changed tactics to attack the accuracy & try to claim it's actually much lower.
No methods are perfect much less for complex economies be it China or in the west. The important point is the method used was consistent. Similar to what Assasin said, when Chinese figures was overheating & inflation was high or export & industrial production fell sharply recently these guys were happily quoting the figures since it fits the picture they wanted to paint. When GDP & retail sales were showing good growth, they try to discredit it.

Another interesting point, probably for those studying journalism etc, though far from surprising is if one follows these western reports closely over these last months one can literally see how the direction changes over time as I described above something like a herd of sheep.

 

[bladerunner]

I suppose one of the questions is, why comparing the current quarter with the previous quarter results in a more accurate picture of possible GDP, than the CHinese way of comparing yrs.

 

[Schumacher]

I suppose one of the questions is, why comparing the current quarter with the previous quarter results in a more accurate picture of possible GDP, than the CHinese way of comparing yrs.

These are the things you can put a group of PhDs in a room & force them to argue & there still won't be much conclusion after a long time. The important thing is, the method used is same one used as in the past, ie consistency.
Fine if one wants to compare apple to apple, China's 08 was 9% & US was about 1.8%, similar picture really. Sure China don't show GDP by quarter & maybe it's indeed slower than 6.8%, but since China is a developing country & the state play a bigger role, it'll swing more both to the downside & up but it smooths out in longer term like a year.

 

[Quickie]

It boils down to the choice of using which of the 2 methods:

1. Quarter on quarter in the same year
OR
2. This year's quarter to last year's corresponding quarter.

I would say the second one is usually the more appropriate method in most cases to measure growth, although this is not always the case. In any case, the article contention is not really about this but about the methodology that China uses in measuring economic growth. Question is: Do the western economists have unlimited access to critical economic data from China. If the answer is 'No', then how reliable can their assessment be?

 

[AssassinsMace]

Like I mentioned earlier, the US has been in a recession for over a year yet this information wasn't revealed until recently. Which means there was a deception by those at the very top on what was really happening. Recession basically means the real figures were quite contrary to what was given to the public. Ergo, a developed Western economy is no more or less moralistically or ethically different from a totalitarian communist one. They both do it for the exact same reason.

 

[bladerunner]

Like I mentioned earlier, the US has been in a recession for over a year yet this information wasn't revealed until recently. Which means there was a deception by those at the very top on what was really happening. Recession basically means the real figures were quite contrary to what was given to the public. Ergo, a developed Western economy is no more or less moralistically or ethically different from a totalitarian communist one. They both do it for the exact same reason.

Yes it certainly does'nt feel like we've been in a recession for more than a year and such a long time ago when the HKSB first reporting trouble with those sub prime investments.but in the West one does get the benefit of the Peter Schiffs who had forseen increasing problems with the sub primes, and the ever growing American deficit a year before a meltdown happened. In China I think one would be more restrained in giving a different opinion to the official one.
I don't think Germany misreported its figures,and its economy was quite sound with its factories having good orders.its circumstances are due to outside factors.
To put all in a nutshell this recession is due to a financial meltdown, rather than a industrial, technology bubble bursting or a fuel one.

 

[bladerunner]

China is certainly proving to be quite a puzzle for the China observers, as its growth behaviour and social development does not entirely conform to any models crafted out by so called experts.

 

[RedMercury]

Feeling the stones...

Also, quarter on quarter in the same year has a faster response, while quarter to corresponding quarter of previous year smooths at the cost of introducing a lag. It also automatically adjusts for seasonal effects.