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For investors and policymakers around the world, China’s quarterly economic data is a starting point for deciphering the state of the world’s second-largest economy, but the latest figures held a mystery of their own.
The country’s gross domestic product grew 0.8 percent quarterly and 6.3 percent year-on-year in the second quarter. However, the combined quarterly growth of the previous four quarters implied growth of 6.8 percent.
The discrepancy arose from official “seasonally adjusted” revisions of quarterly growth data in 2022 by the country’s National Bureau of Statistics. While such revisions are routine, economists say their impact has grown in recent years.
The lack of a detailed explanation of the process highlights the difficulty of analyzing China’s statistics at a time when the development of its economy is seen as vital to global growth.
“Here we are at the moment. How much did the economy grow in the second quarter? [has it] not? This is a very important question for markets and policymakers alike,” said Louis Kuijs, chief Asia economist at S&P Global. “Everyone asks, ‘Is the Chinese economy faltering?’ It is not easy to give a valid answer to that.”
China has “certainly become more of a black box and is steadily moving in that direction,” said Shehzad Qazi, chief operating officer at China Beige Book, which publishes alternative economic indicators based on surveys of private companies in the country. The surveys consistently point to weaker consumption than the official figures show.
Long-standing questions about the interpretation of China’s economic indicators take on a new urgency in 2023 as official data suggest momentum is fading following the lifting of Covid-19 restrictions. Policymakers are grappling with trade headwinds, weak consumption and a housing shortage that has dragged on for nearly two years.
As in many other countries, China’s official data is typically taken as a “reference” that can be supplemented by other indicators ranging from steel production to energy consumption. But while some new data series were added, a variety of other sources were discontinued, often for no clear reason. Access to supplementary and detailed information has also become more difficult.
“The disappearance of series has been part of the challenge of analyzing China in general, but accessing reliable data has definitely become more difficult in recent years,” said Diana Choyleva, chief economist at forecasting firm Enodo Economics in London.
Questions about the reliability of domestic data have surfaced in the wake of the country’s zero-Covid policy. In the absence of clear information from local authorities, traffic data has been used as an indicator of the severity of the city-wide closures. The government stopped releasing death dates after a nationwide outbreak began. This month, Zhejiang province released figures showing a sharp increase in cremations and subsequently deleted them.
Carlos Casanova, senior economist for Asia at UBP, said he hadn’t been able to access detailed data on local government land sales on the Wind data platform because its use outside the country was restricted this year. “If I were to guess, I’d say it’s because of stress points that have built up. . . and they don’t want the market to get too carried away,” he said.
As the government tightens controls over information, including a new data law that in many cases requires multinational companies to split their domestic and external data, fewer and fewer people are providing data of any kind.
“When China Beige Book started, we had a lot of competitors,” said Qazi, who testified before a US Congressional committee on China this month on the country’s economic data. “A lot of that is gone now.”
Another economist, who works for an international investor and asked to remain anonymous, said there is “less open dialogue” in China at the moment and there are “some data restrictions that are tightening”. However, he doubted that the government would cover up a growth shock. “They are sensitive to the accusation that the data is not entirely reliable,” he said. “[The government] would just have to print out the numbers.”
The sense of slowing economic momentum in China rests largely on the official data itself. The government has set a cautious growth target of 5 percent, and Premier Li Qiang said in a speech last month the country is on track to meet it.
However, as China’s economy becomes more prominent in the global context, there has been little development in the country’s communications, analysts said.
In its data release this week, the NBS said in a footnote that revisions to its “seasonally adjusted” model referred to monthly revisions for manufacturing firms, fixed asset investment and retail sales. When asked about how the seasonal model would work, it declined further comment, instead citing the release.
“The national accounts data in China are still not prepared in the way we know them from advanced economies,” said Kuijs. “For accountability and transparency standards, you can contact: [other countries] and ask them questions and have them explain why we changed that.”
Additional reporting by Andy Lin in Hong Kong