In summary
There are of course more than three views on this subject. However, as the author in the first piece highlighted wryly observes, most recently, ‘..the quantity of debate has not been matched by quality.’
The common thread to these three different takes on this subject though is that numbers may not be wholly reliable in China; but, with a little bit of commonsensical skepticism applied, they’re probably not that bad either. Moreover, there’s no Orwellian conspiracy at the central government level to systematically present a false picture of underlying economic reality.
The Academic
How Reliable are Chinese Statistics
The first (and best IMHO) analysis I’m highlighting here is the most academic and is ‘The Reliability of China’s Economic Data: An Analysis of National Output’ and is a briefing paper prepared for the US-China Economic and Security Review Commission by Mr. Iacob N. Koch-Wesser.
This paper was produced in January 2013 in direct response to the general feeling that China’s GDP data somehow wasn’t capturing the reality of what was by then a manifestly decelerating economy. Mr. Koch-Wesser concludes that although numbers are unreliable in China there is no systematic attempt at a national level to cook the books. There can’t be two sets of numbers, the official and the real, otherwise economic planning couldn’t function he asserts. He also deals with the problems of using proxy date like electricity or coal consumption which can, from time to time, be used as better guides to the true picture but they are only reliable in certain circumstances. He concludes that numbers may be wobbly in part but that China does a pretty good job given its vast size and rapidly changing economy. It could though do better though.
The Quick Read
In March 2013 for most of the same reasons that Mr. Koch Wesser was looking more closely at the subject the Federal Reserve Bank of San Francisco produced and Economic Letter ‘On the Reliability of Chinese Output Figures’. The authors, Mr. John Fernald, Mr. Israel Malkin and Mr. Mark Spiegel, concluded that China’s GDP numbers were mostly reliable. Somewhat at odds with Mr. Koch-Wesser though they back up their claim with a long run analysis using proxy data from both inside and outside China.
You can access the Letter at http://www.frbsf.org/economic-research/publications/economic-letter/2013/march/reliability-chinese-output-figures/
The Latest Book on the Subject
Perhaps the least useful contribution on this subject is the most recent. Myth-Busting China’s Numbers: Understanding and Using China’s Statistics by Mr. Matthew Crabbe starts well but quickly deteriorates into the kind of tired rant that those of us close to the subject can learn little from. If there is a nugget of gold in the book it comes from the subject Mr. Crabbe is most familiar with i.e. the consumer sector. Echoing a point made by Mr. Koch-Wesser he notes official data on personal consumption in China has been very materially overstated in the past. This important point goes a long way to explaining why so many Western consumer companies have run aground in China; they thought the market was much bigger than it in fact is. There’s a kinder review at http://www.ft.com/intl/cms/s/0/7dba9508-f603-11e3-83d3-00144feabdc0.html#axzz35zZSMZk0 but if you see the book on newsstands at the airport, a place I presume its title intends it to end up, save your pennies.
Happy Sunday