From Mark Mobius’ Blog at Franklin Templeton Investing: (/2014/08/chinas-statistics-can-you-trust-them.html)
Q: I am curious on how reliable the statistical sources provided by the Chinese authorities are and how an investor in emerging markets should best interpret the data? Lukas – Canada
A: From my experience, statistics in China can be just as reliable as statistics you can get in Canada or the U.S. China is a big country and the authorities need reliable data just like any government around the world. I believe the days are gone when the government deliberately wanted to manipulate the data for propaganda purposes. But even if you don’t believe the statistics, there are many ways to confirm and double-check. For example, we recently checked the export statistics of Brazil, Australia, the U.S., Germany and other countries in relation to China. Those numbers pretty much reflected the high growth and demand that we were seeing from the Chinese statistics. It’s always important to check and double-check statistics, because, even without manipulation, there can be statistical errors which creep into data, no matter what the source. – Mark
I have been unable to find the “OECD insists…” story that I made so much of. Either I hallucinated it or there is a vast, right wing conspiracy at work (I prefer the latter explanation). However, here are some references from the FT, World Bank, Bloomberg and others in support of my contention that China’s GDP is, if anything, understated rather than overstated:
1. China’s Misleading Economic Indicators (Financial Times):
The last two rebasing exercises were done in 1993, which increased the nominal size of the service sector by 32 per cent and GDP by 10 per cent, and in 2004 which led to another large increase in the share of services in GDP and upped the annual economic growth rate from 9.2 per cent to 9.9 per cent for the previous decade. Ironically, the government was not enthused about these upward adjustments since it weakened China’s case for favourable treatment in international trade and aid negotiations.
A 2008 Morgan Stanley study estimated that Chinese GDP was about 30 per cent higher than official figures, and per capita consumption was as much as 80 per cent higher. Some research surveys show that household income has been understated by some 20-30 per cent of GDP.
There is some official support for such views. The head of the national accounts department at China’s bureau of statistics acknowledged in 2009 that its household consumption figures are deficient. The statistics are based on an obsolete, 30-year-old sample survey; do not take full account of cash transactions; do not include fully non-cash provision of social services; and have not been adjusted to reflect the market values for owner-occupied housing. Moreover, as a result of high sales taxes, businesses often do not issue receipts leading to household purchases being underreported.
These conclusions have been given more credence by two Shanghai-based professors, Jun Zhang and Tian Zhu, who concluded that personal consumption was significantly underestimated by as much as 15 percentage points of GDP. This is due to underreporting of housing expenditures; company-provided consumption-related benefits; and informal household income.
By implication, estimates of the share of investment in GDP are too high. This stems partly from the practice among many companies and government entities to package consumption-type expenditures as investment because of the lingering belief that consumption is bad and investment is good. In addition, GDP estimates of investment do not adequately adjust for the rising cost of land which has soared in recent years.
Overall, the personal consumption-to-GDP ratio might be closer to 45 per cent rather the reported 35 per cent and the investment ratio about 38 per cent instead of 48 per cent. If so, then China’s consumption and investment ratios are in line with its Asian peers such as Japan, South Korea and Taiwan during their comparable stage of development.
China’s statistics are flawed but there is probably no systematic intention to bias the results in one direction or another. Contrary to popular beliefs, the existing distortions may actually be giving a more negative impression than the reality. Read more at: http://carnegieendowment.org/2014/08/29/china-s-misleading-economic-indicators
2. Financial Times Guest post: recalculate China’s GDP before rebalancing. By Ken Peng of Citi Private Bank. http://blogs.ft.com/beyond-brics/2013/11/28/guest-post-recalculate-chinas-gdp-before-rebalancing/
3. China’s GDP May be Bigger than You Think. Bloomberg. http://www.bloomberg.com/bw/articles/2014-12-15/chinas-gdp-bigger-than-you-think
4. Wikipedia Inflation-Adjusted GDP Growth Historical: https://en.wikipedia.org/wiki/Historical_GDP_of_China
5. China’s New GDP Measurement: Impact on Growth, Income, and Productivity: /2014/10/chinas-new-gdp-measure.html
6. China emissions much lower than expected: Financial Times – http://www.ft.com/intl/cms/s/0/236fedce-462e-11e5-af2f-4d6e0e5eda22.html#axzz3jPUklROf
Hu Jintao oversaw the fastest growth period in world history!
He put the Chinese economy within 10 years of overtaking the US economy.
I cannot wait till the day China becomes the largest economy.
Since the west doesn’t like Hu, that means Hu has done a wonderful job for the Chinese people.
Anything the west hates is a great news for china.
- China will overtake the US this year as the world’s largest trading nation.
- China became the largest industrial power under Hu.
- China is now the 3rd largest consumer market.
- 2nd largest luxury market.
- Largest automobile market.
- Largest manufacturing nation.
- Largest exporter.
- 2nd largest importer.
- Largest energy consumer.
- Largest electricity consumer.
- Largest stock of gross savings pool.
China is now the largest trading partner and largest foreign investor in Africa.
China is the largest trading patent of brazil, India, all East Asian countries and ASEAN.
China is the largest trade partner of Australia.
China overtook the US as the largest recipient of FDI this year.
China now LOANS more money to the developing world than the world bank, US export-import bank and inter-development bank COMBINED!
China is now the LARGEST CREDITOR NATION in the world.
China also propped up the bankrupt US economy by buying American junk bonds.
You know why china did so well?
Because of the greatness of the Chinese political system.
It just shows Chinese communism is VASTLY superior to western democracy (since the west declined over the past 10 years).
As Hu Jintao said, China will NEVER adopt FAILED western democracy!
China has become a massive power in economic, financial, military, political, science & technology, sports, cultural, media, natural resources.
Under Hu Jintao, China is within 10 years of surpassing the US in ALL areas!
That is a MIGHTY success.
3:29 pm November 16, 2012
Hu also oversaw the success of the great Shanghai Expo in 2010 and the incredible 2008 Beijing Olympics where china topped the gold medal table and made the Americans squirm.
6:44 pm November 16, 2012
No matter how many time I draw my chart, my graph is pointing downward.
10:05 pm November 16, 2012
Also Hu was responsible for china’s success in space.
China sent its first man into space, conducted its first spacewalk, conducted its first manual and automatic space docking.
China also became 2nd largest gold consumer and gold producer.
China is largest consumer of platinum, palladium.
China is 2nd largest silver consumer.