Page 7 - THE SOUTH CHINA BUSINESS JOURNAL
P. 7
June 2017
Photo from bing.com
One popular method is the “Li Keqiang Index”. The Li Keqiang take into account the harder to measure services sector. Accord-
Index measures bank lending levels, rail freight volumes, and ing to Chi Lo of BNP Paribas, booming new sectors, including
electricity production as proxies for growth. Other methods use online shopping and journey-booking, are not even included in
indicators such as truck loadings, cement, steel, and natural gas traditional official retail sales data.
consumption, and imports from commodity-rich countries like
Australia and Canada. The government has made efforts in recent years to reform the
central statistics bureau and better measure the services sector
When using measures such as these, China’s growth in recent by reducing reliance on provincial data sources and establishing
years can look even less rosy than its multi-year decline would direct reporting systems with over 800,000 enterprises.
suggest. For example, an informed observer should question
whether high growth rates are accurate when a local economy’s The Move towards Quality Indicators
electricity consumption is stagnating or growing at low amounts;
significant growth rates are often associated with increases of As China transitions into a developed economy, the government
electrical consumption by new factories. is increasingly using “quality” indicators to judge economic per-
formance. Statistics that describe quality of life, such as unem-
It can, however, be difficult to identify these discrepancies in of- ployment ratios, income growth, and housing affordability, are
ficial statistics. Officials are aware that these statistics are moni- becoming more important gauges of performance than simple
tored, and this consequently creates some incentive to massage GDP growth.
data.
Emphasizing a wider range indicators such as these not only
Further, using energy consumption and trade statistics as prox- promotes a more nuanced view of China’s economy, but also re-
ies to gauge real economic performance has its limits. The in- duces incentives for bureaucrats to inflate growth figures. While
dicators Li Keqiang used a decade ago were for a far different political pressure for robust GDP growth persists, the shift to
economy than today’s, where services now account for the ma- prioritizing quality economic indicators over expansion and out-
jority of economic activity, and domestic consumption and retail put figures will lead to more detailed, accurate, and actionable
activity are rapidly expanding. economic data in the long run.
Originally designed to assess state-led heavy industry and indus- This article was first published by China Briefing.
trial output, China’s statistics collection apparatus struggles to
5
Photo from bing.com
One popular method is the “Li Keqiang Index”. The Li Keqiang take into account the harder to measure services sector. Accord-
Index measures bank lending levels, rail freight volumes, and ing to Chi Lo of BNP Paribas, booming new sectors, including
electricity production as proxies for growth. Other methods use online shopping and journey-booking, are not even included in
indicators such as truck loadings, cement, steel, and natural gas traditional official retail sales data.
consumption, and imports from commodity-rich countries like
Australia and Canada. The government has made efforts in recent years to reform the
central statistics bureau and better measure the services sector
When using measures such as these, China’s growth in recent by reducing reliance on provincial data sources and establishing
years can look even less rosy than its multi-year decline would direct reporting systems with over 800,000 enterprises.
suggest. For example, an informed observer should question
whether high growth rates are accurate when a local economy’s The Move towards Quality Indicators
electricity consumption is stagnating or growing at low amounts;
significant growth rates are often associated with increases of As China transitions into a developed economy, the government
electrical consumption by new factories. is increasingly using “quality” indicators to judge economic per-
formance. Statistics that describe quality of life, such as unem-
It can, however, be difficult to identify these discrepancies in of- ployment ratios, income growth, and housing affordability, are
ficial statistics. Officials are aware that these statistics are moni- becoming more important gauges of performance than simple
tored, and this consequently creates some incentive to massage GDP growth.
data.
Emphasizing a wider range indicators such as these not only
Further, using energy consumption and trade statistics as prox- promotes a more nuanced view of China’s economy, but also re-
ies to gauge real economic performance has its limits. The in- duces incentives for bureaucrats to inflate growth figures. While
dicators Li Keqiang used a decade ago were for a far different political pressure for robust GDP growth persists, the shift to
economy than today’s, where services now account for the ma- prioritizing quality economic indicators over expansion and out-
jority of economic activity, and domestic consumption and retail put figures will lead to more detailed, accurate, and actionable
activity are rapidly expanding. economic data in the long run.
Originally designed to assess state-led heavy industry and indus- This article was first published by China Briefing.
trial output, China’s statistics collection apparatus struggles to
5
