All told, assessing the accuracy of China’s GDP growth remains a challenge and no statistical model can provide a definitive alternative measure. But our analysis suggests that official figures have not recently been overstating GDP growth for three reasons. First, the excess smoothness of official GDP has significantly diminished since the pandemic. Second, our alternative indicator, which relies on a broad set of data series informative about the Chinese business cycle, including consumption and the property sector, closely tracks official GDP. Finally, the supply side of China’s economy has performed remarkably well in the context of robust demand for Chinese goods and industrial policies promoting self-reliance. This strength has offset notable weakness in Chinese consumption as COVID-19 lockdowns and property market weakness exerted persistent drags on pandemic-era consumption.
Growth over the past years received a big boost from net exports as real exports surged and real imports were flat. That is unlikely to be sustained, especially in the face of rising trade tensions. Moreover, with many manufacturing industries already suffering from overcapacity, there are limits to further increases in investment. As such, to maintain 5 percent growth going forward, China will need to strengthen consumption. The government’s recently announced plan to boost consumption indicates a recognition of this need.
(copy-pasting here, as when i saw this article in another post 95% of comments could be answered or directly contradicted the very conclusion of the article)
teethgrindingaches on
Betteridge’s law of headlines….broken by the Fed? Don’t see that every day.
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# 4. Conclusion
All told, assessing the accuracy of China’s GDP growth remains a challenge and no statistical model can provide a definitive alternative measure. But our analysis suggests that official figures have not recently been overstating GDP growth for three reasons. First, the excess smoothness of official GDP has significantly diminished since the pandemic. Second, our alternative indicator, which relies on a broad set of data series informative about the Chinese business cycle, including consumption and the property sector, closely tracks official GDP. Finally, the supply side of China’s economy has performed remarkably well in the context of robust demand for Chinese goods and industrial policies promoting self-reliance. This strength has offset notable weakness in Chinese consumption as COVID-19 lockdowns and property market weakness exerted persistent drags on pandemic-era consumption.
Growth over the past years received a big boost from net exports as real exports surged and real imports were flat. That is unlikely to be sustained, especially in the face of rising trade tensions. Moreover, with many manufacturing industries already suffering from overcapacity, there are limits to further increases in investment. As such, to maintain 5 percent growth going forward, China will need to strengthen consumption. The government’s recently announced plan to boost consumption indicates a recognition of this need.
(copy-pasting here, as when i saw this article in another post 95% of comments could be answered or directly contradicted the very conclusion of the article)
Betteridge’s law of headlines….broken by the Fed? Don’t see that every day.
Doubt it.