Many economists remain suspicious on the validity of economic data that is being reported from China as they (continue to) believe that Chinese officials are manipulating such data to generate a sizable growth rate that actually diverges from the true data itself.
On Monday, China reported that its economic growth in the third quarter of 2015 (July-September timeframe) had slowed to 6.9 percent, the first time since 2009 that its gross domestic product (GDP) fellow below 7 percent since the second quarter of 2009, when it fell to 6.2 percent.
Although China’s third quarter expansion was clocked at the slowest since 2009, it did however beat market estimates of 6.8 percent growth.
Be that as it may, economic growth in China is poised for its worst yearly economic growth in 25 years.
That said, there is heightened pressure — on top of the already existing pressure — on Chinese authorities to pull out the playbook and do all that is possible to achieve Premier Li Keqiang’s growth target of “around 7 percent” for 2015.
A tremendous strain has weighed on global markets this year amid a glut in global commodities as economic growth continues to slow in China.
But how real is the actual data itself?
As The Nikkei Asian Review Reports:
Even Chinese Premier Li Keqiang is said to have called the official data “man-made” years ago as a regional Communist Party chief, citing railway cargo volume, electricity consumption and bank lending as better indicators.
As growth in China eases, as expected, growth expectations for the nation this year were largely trimmed to 6.8 percent by leading institutions.
But let’s be real, what is the actual growth rate in China? Thoughts vary:
For example, Oxford Economics believes that China’s economic growth is actually running at a pace closer to 4 to 5 percent.
Capital Economics believes that China’s GDP growth is being overstated by 1 to 2 percentage points due to a glitch in the way it is being calculated.
The basis of the analysis by Capital Economics is focused on the “GDP deflator”, which is the inflation measure that is used to convert estimates of nominal GDP into real, inflation-adjusted terms.
According to the estimates from Capital Economics, China’s economy had only grown by 4.9 percent.
Honestly, nobody knows what China’s true economic growth is, and this has been continuously debated back and forth to no end.
The fact of the matter is: that growth in China is slowing, there is no question of that, but by how much is not known, and may never be known in the short term.
As the mystery remains, here is a funny joke to make you laugh before the weekend, as quoted by The Nikkei Asian Review:
A joke circulating around the country says the true savior of the economy is not the finance ministry or the central bank, but the statistics bureau, which can cook the books.