Twinblade
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Lies, damn lies, and China's economic statistics
Date August 15, 2013 - 5:02PM
Kelly Olsen
China has soared almost to the top of the world's economic league tables, but whether the official data underpinning its status can be trusted is a constant headache, analysts say.
There's a lot of problems in China. One is that there's a perception that the numbers have political incentives embedded in them
Simmering unease regarding China's economic figures has taken on new meaning in recent months with discrepancies in some statistics and questions over just how much gross domestic product (GDP) is really growing.
Earlier this year, economists took issue with Chinese monthly trade statistics, which diverged wildly from expectations, and two weeks ago official and private purchasing managers surveys - a key measure of manufacturing - surprisingly pointed in opposite directions.
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Doubts have also been raised about how inflation is calculated.
"If there was an index for suspicion about China's official statistics, it would be off the charts, or to use the technical American term, 'crazy bad'," Standard Chartered economist Stephen Green wrote in a report.
Lies, damn lies, and China's economic statisticsThe report by Green of Standard Chartered, released earlier this year, estimated economic growth for 2011 and 2012 at 7.2 per cent and 5.5 per cent respectively, far below official figures of 9.3 per cent and 7.8 per cent.
Acknowledging the inherent challenges he had with his calculations, he wrote that his figures could at best be described as "guesstimates", adding: "We have to use official data to question official data."
Christopher Balding, who teaches at Peking University's HSBC Business School, argued in a paper this month that skewed consumer price index data, especially for housing, seriously overstates the size of China's economy.
"Conservatively, correcting for housing price inflation ... adds approximately one per cent to annual consumer price inflation in China, reducing real GDP by more than $US1 trillion ($1.09 trillion)."