China’s Statistics Books are Cooked

Monday, September 7, 2009 23:30

Following up on my recent post Following China’s Path of Least Statistical Resistance, I came across the recent Foreign Policy article  How China Cooks Its Books, and was pointed in the direction of another article in Caijing (h/t Ian) Is China’s Export Engine Slowly Restarting? , that provide or interesting reads and insights:

From FP:

China has predicated its very claim of being the healthiest large economy in the world on faulty statistics. The government insists that even though China’s all-important export sector has been devastated — contracting about 25 percent in the past year — a massive uptick in domestic consumption has kept factories producing and growth churning along. A close examination of retail sales and GDP growth, however, tells a different story. China’s domestic retail sales have risen about 15 percent year on year, but that does not really translate into Chinese consumers purchasing 15 percent more televisions and T-shirts.

Caijing:

A series of positive economic indicators has inspired confidence in a possible recovery for China’s import-export business, which scraped bottom after a global financial crisis struck last year. Import and export data released by the General Administration of Customs in July showed foreign trade gradually heating up again. Statistics pointed to a business rebound in each of five, consecutive months. [….] These figures suggest foreign trade, China’s most important engine for economic growth, has indeed bottomed out. Exports seem to have turned the corner on a road to post-crisis recovery.

But do the nation’s exporters agree? To answer that question, Caijing reporters recently visited key export manufacturing areas along the nation’s east coast, from the Shandong Peninsula to the Yangtze River Delta and as far south as the Pearl River Delta. They found companies from textile makers to boiler manufacturers struggling to survive – and many still waiting to turn the corner.

Both articles offer some very interesting insights into the softness of China’s statistical infratructure, and more than anything, highlight the need for everyone who is looking at/ to China to look for concrete among the tofu.

What do I look at?  Container throughput, retail shop turnover along high traffic zones, energy consumption (electricity and oil), and foreign direct investment as a start. All indicators that this are changing at the core of the economy

What do I tend to avoid?  metals and currencies, real estate/ equity prices, white good sales and car sales.  Figured that can be manipulated very easily through a one off policy that has no regard for the long term

What do I tend to question?  Everything… including how much the building of more highways will truly benefit China’s long term.  Were it 10 years ago and China still needed national highways and tier 1 ports (air, river, and sea) to tie the country together, then I would be a buyer.  But these were build 5 years ago, and now the building is from 3rd to 4th tier.  Areas that long term will return, but not at the same rate that those investments from 5 years ago will.

So.. what do you look at?  What is concrete.. what is tofu?

Other articles related to statistics and economics:
China Statistics Smackdown: CLSA vs. CFLP
8% Growth Will Prove to Be A Stretch For China in 2009
The price is….. right? M&A Valuation in China

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2 Responses to “China’s Statistics Books are Cooked”

  1. Nan Gongyuan says:

    September 8th, 2009 at 2:42 am

    “Take a little pinch of corruption
    Add some figures plucked from the skies
    Double whatever it is by your provincial targets
    We’re cooking juicy statistics, and damned lies…”

    You gonna love ma chocolate salty balls!

    (Apologies to Chef)

  2. Renaud says:

    September 8th, 2009 at 4:02 am

    The data from customs are not exact (because of transshipments, smuggling…) but they give the trends.
    I guess the quarterly reports of the 3 large 3rd-party QC firms would also be good indicators about the trend in exports. But it’s not perfect: they don’t always give the details of the results for their consumer products divisions; and their activity tends to go up anyway thanks to the tougher regulatory environment.

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