Some alternative ways to measure the Chinese economy: underwear or pickles?

China will release its economic growth figures for the first quarter of this year on Wednesday, figures that are still closely watched by global markets and interest rate makers.

The barometer of the world's second largest economy has also become an important measure of the trade war between China and the United States. President Donald Trump has repeatedly stated that the slowdown in the Chinese economy necessitated a trade deal with Washington.

But in a country where products ranging from eggs to honey to luxury bags can be falsified, many economists question the reliability of Chinese statistics.

"The statistics are highly political in China," said Jude Blanchette, head of China's Crumpton Group, a business intelligence company, describing a constant effort to control information. "But how can a country be governed without access to good information?" He asked.

The Chinese government has set its economic growth target for 2019 between 6.0% and 6.5%, according to a report released by Prime Minister Li Keqiang last month. The objectives are a relic of the central economic planning of the Mao Zedong era.

It had set a target of 6.5% for 2018 and a growth of 6.6% for the year. Although it was a good surprise for many, it was still the slowest pace recorded by China since 1990.

These are the numbers announced by the National Bureau of Statistics of China, but many analysts believe that they are biased. After all, data is collected by local governments, which are incentivized to inflate their numbers because they are rewarded for achieving their growth and investment goals.

"As the statistics contradict each other, many people doubt official government figures," said Xiang Songzuo, a former chief economist at the Agricultural Bank of China, in an interview with Nikkei in Japan last month.

This, apparently, includes the central bank. The People's Bank of China has its own set of growth statistics that it uses to make decisions about the economy.

The experts at the Brookings Institution looked at the numbers and made their own calculations. In a study released last month, they estimated China's GDP growth between 2008 and 2016 was 1.7 percentage points lower than that suggested by official statistics. If this were true, China's real growth last year would have been less than 5%. Many economists believe that the growth rate is about 3 or 4%, while some even think it's negative.

But in China, GDP is so politically sensitive that it is unthinkable to recognize such numbers.

Here are some alternative ways to measure the Chinese economy.

The Li Keqiang index

It is the most cited alternative measure of economic growth in China. Before becoming prime minister of China, Li was secretary of the Communist Party in Liaoning Province, in the north of the country. At the time, he had suggested that China's GDP data was "artificial" and had said to the US ambassador to China at the time, Clark T. Randt Jr., qu & # He preferred to use other indicators to get a picture of the economy. The narrative of their conversation by the ambassador was contained in one of the diplomatic cables published by WikiLeaks.

Li said look at three figures: electricity consumption; the volume of rail freight, which, he said, was fairly accurate because fees are charged for each unit of weight; and the amount of loans disbursed, which, he said, also tended to be precise, taking into account the interest charges charged.

"Looking at these three figures, Mr. Li said that he can measure with relative precision the pace of economic growth.All other figures, especially GDP statistics, are" indicative ", he said with a smile, replied the ambassador in Washington.

The Economist magazine then created a "Keqiang Index" for the Chinese economy.

The index of the excavator

Some economists have developed an "Excavator Index", stating that heavy machinery sales are an indicator of infrastructure investment.

Highway, bridge, construction and engineering projects are based on excavation work by excavators. Thus, the sales volume of shovels on the market has become the microscopic window for observing capital investments, the government daily People's Daily reported in 2017.

There was a strong correlation between "excavator index" and infrastructure construction, said Zhou Qingjie, professor of economics at the Beijing University of Technology and Commerce, the newspaper.

Excavator sales reached 11,283 in May 2017, an increase of 105.65% over the previous year, the newspaper reported.

But the index has turned out a bit lacking. The overall economy grew only 6.9% in 2017 compared to the previous year.

The underwear index

The economy of northeastern Liaoning Province is doing well, the JD Big Data Research Institute, one of the largest online sales sites in China, reported in December.

How did he know? Because sales of underwear for men had increased three years in a row. Sales of men's underwear in the province increased by 42% in 2017 compared to the previous year, then by 32% in 2018.

The index was a turnaround compared to the famous barometer of former Federal Reserve Chairman Alan Greenspan, who claimed that the decline in underwear sales for men indicated a deterioration of the economic situation, and vice versa.

This index may contain some truth. The province's economy has recovered significantly in 2018. "The recovery is mainly due to rising prices for coal and steel during this period," said Liang Qidong, Vice President of the Liaoning Academy of Social Sciences. "The recovery is also reflected in the volume of rail and road freight, the electricity consumption of the industry, the volume of activity and employment," he said. , according to a Global Times report on the index.

The instant noodle index

Some economists have said that instant noodle sales can be a useful indicator of a country's overall economic situation. During good times, people spend money for better food. But during times of financial difficulty, they tend to buy inexpensive foods such as noodles in pots instead of restaurant meals.

In the first half of 2018, the two largest Chinese instant noodle companies – Master Kong and the Taiwanese company Uni-President Enterprises Corporation – said their annual sales grew by 8.5% and 6%, respectively, according to Sixth Tone , an online publication. At the same time, food shipments grew at the slowest pace since this trend became a trend, with a relatively small increase of 18.4%.

The pickle index

To track the migration to China, a government official was monitoring sales of a large radish-like vegetable, or zhacai, from Fuling, a Chongqing district.

Marinated vegetables are a staple of migrant workers and consumption figures have helped researchers track the movement of workers in China, said a planning officer at the Economic Observer Commission for Development and Reform (NDRC) in 2013.

Migrant workers leave their home province in the central rural areas to travel to the economic hubs of southern and eastern China.

The decline in vegetable sales seems to corroborate the signs of a slowdown in the economy in 2013, said the official, according to the South China Morning Post.

The proportion of pickled vegetable sales in southern China increased from 49% in 2007 to 30% in 2011, while the share of sales in the inland provinces increased steadily as the migrants returned home. The Chongqing Fuling zhacai saw its revenue increase by about 50% between 2011 and 2012, the newspaper reported at the time.

(With the exception of the title, this story was not changed by NDTV staff and is published from a syndicated feed.)

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