Tag Archives: National Bureau of Statistics

Zero-Covid Weighs Heavily On China’s GDP Growth

CHINA’S ECONOMY JUST about eked out positive growth in the second quarter compared to a year earlier, but the contraction from the first quarter tells the story of the economic impact of the zero-Covid policy on businesses and consumers, especially the lengthy lockdown in Shanghai.

Gross domestic product grew by 0.4% in April-June year-on-year and contracted by 2.6% compared to January-March, the Bureau of National Statistics announced today.

Shanghai’s economy shrank 13.7% year-on-year in the second quarter and Beijing’s 2.9%.

The national year-on-year number was the smallest since the data series began in 1992, excluding the 6.9% contraction in the first quarter of 2020 due to the initial COVID shock.

The recent high-frequency indicators, particularly for retail sales, suggest that the economy is starting to bounce back.

However, outbreaks of the highly contagious Omicron variants forcing more full or partial lockdowns remain a downside risk to recovery, given the continuing commitment to the zero-Covid policy.

The beleaguered property development sector remains a drag on growth, and the worsening outlook for the global economy is a further headwind.

The official target of 5.5% growth for the full year continues to look beyond reach, with an unrealistic 10% growth needed in the second half to achieve it. Further stimulus measures are likely, although authorities are limited in what they can do that will not stoke inflation (subdued by world levels) or worsen long-term debt risks.

Bloomberg calculates that $1.1 trillion has been earmarked for infrastructure spending, suggesting at best an extended pause to the effort to deleverage the economy.


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China’s Slowing Economic Growth Is Fine For Now

THE LATEST HIGH-FREQUENCY economic data from the National Bureau of Statistics (NBS) confirms the slowing trend of China’s domestic economy revealed in earlier indicators.

  • Industrial output slowed from 8.3% year-on-year (y-o-y) in June to 6.4% in July, the slowest pace in a year, although high-tech manufacturing grew by 15.6% y-o-y. 
  • Retail sales slowed to 8.5% y-o-y, the slowest growth this year, from more than 12% y-o-y in May and June. Sales of durable and nondurable goods slowed, in-store and online. Services also slowed across both channels. 
  • Fixed investment grew by 10.3% y-o-y in the first seven months of 2021, half the 19.9% pace of the first four months of the year.
  • Urban unemployment was little changed at 5.1% from 5.0% in June. 

As to be expected, the NBS asserts that the economy is continuing its stable recovery post-pandemic, but acknowledged the headwinds, including the resurgence of Covid-19, the recent flooding and the ‘growing external uncertainties’, which could cover a multitude of sins from a slowing global economy as the Delta variant causes a renewed surge of infection in developed markets to deteriorating US-Chinese relations.

The economy remains on track to meet its official goals for 2021, including GDP growth of at least 6.0% this year. Anything more may be a stretch. 

Job creation remains critical. The official target is for some 11 million new urban jobs this year, and the surveyed urban unemployment rate to be around 5.5%.

Hitting this goal is more important than the GDP one. Making progress with rebalancing the economy towards being driven more by domestic consumption and less by exports and infrastructure investment while keeping the private sector aligned with Party goals trumps both.

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Data doubts

Abacaus. By HB (Own work) Public domain, via Wikimedia Commons

THIS BYSTANDER HAS long not given undue credence to the case that China’s economic data misrepresent the real state of the economy — or at least they don’t misrepresent it any more than any other country’s data.

That assertion comes with a bunch of caveats, notably that counting the output of any economy is fiendishly difficult, and especially one as large as China’s. Also, as nations evolve from being manufacturing- to services-based, the task gets even more challenging.

The way the world counts GDP was designed for an industrial era where there were hard outputs to measure:  ingots of steel;  sacks of coal; trucks full of widgets. In a services-dominated economy, GDP, which is, after all, no more than the value of the output of goods and services, can be increased merely by having bankers raise their fees.

China has a track record of announcing GDP data closely aligned with official targets. It is reminiscent of the way the General Electric Corporation in the United States in days past used to report quarterly earnings bang in line with the guidance it had given stock analysts.

Smoothing earnings, that was called. State planners would appreciate the technique if anyone would.

China’s national GDP number is derived from data collected across the country and while the National Bureau of Statistics fields a team of more than 20,000 data collectors, they still need local assistance.  The importance, real and symbolic, that Beijing attaches to the overall GDP figure is an incentive for local officials and state-owned enterprises to bolster the numbers they furnish.

President Xi Jinping has set a national target of doubling output and income levels by 2020, goals that demand annual GDP growth to average 6.5%. Patriotic statistical duty becomes self-evident.

Longstanding readers may recall Prime Minister Li Keqiang once saying that the country’s GDP data was “man-made” and that measures such as electricity consumption and freight volumes carried by rail were better indications of economic growth.

However, it is almost a decade now since he said that — and analysts named a now barely remembered index of such proxies after him.

China’s national statistics have become much more robust over the ensuing period, particularly those for industrial output which a decade or more back had known methodological flaws in their collection. Paradoxically, those have been mostly fixed just in time for industrial data to become relatively less important than that for services in the overall GDP number.

Similarly, measures like electricity consumption have become less reliable indicators of growth as the economy has become a more efficient consumer of power. Furthermore, is that electricity being used to run a mill or a mall?

Wang Baoan, the disgraced head of the National Bureau of Statistics who has been brought down by the anti-corruption campaign, had once said that tax data supported his office’s GDP numbers — not that that is an assertion that can be easily verified by outsiders.

In short, China’s numbers may have a wide margin of error, and state statisticians have become adept in optimising the GDP deflator used to convert between nominal and real growth (underestimating the inflation measure will give an impression of faster real growth), but fudge is not the same as fabrication.

For one, policymakers themselves need a more not less accurate GDP number to direct the economy along its decelerating glide path towards ‘rebalance’. Even China would be unlikely to be able to conceal the existence two sets of books indefinitely.

China now publishes so much economic data that evidence of activity, in piecemeal parts of the economy at least, is hiding in plain sight. Perhaps the one thing that can be said with certainty is that both the official statistics and the numbers proffered by their critics are now mostly headed in the same direction.

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August 27, 2016 · 4:06 pm

However You Mix The Basket, China’s Inflation Persists

Inflation hasn’t continued its decline from November’s peak, as policy makers had hoped and most analysts doubted. The Consumer Price Inflation number for January has come in at 4.9%, closer to November’s 5.1% than December’s 4.6%, if less than the 5.3% consensus forecast.

Beijing has deployed an old trick: changing the mix of the basket of consumer goods whose prices it samples. It does this every five years. This time, food has been given less weight; property and services more. The National Bureau of Statistics says this has not significantly changed the January number; it actually pushed it up by 0.024 percentage points (see NBS’s chart below). Whatever. The change will certainly have mitigated the 10.3% month-on-month jump in food prices.

What is clear is that inflation is running above target (4% for 2011), is responding slowly to the steady ratcheting up of measures to contain it and that more tightening such as another round of interest rate rises to follow the one earlier this month is likely sooner rather than later.

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