“The growing problem with China’s unreliable numbers”:
Rather than one single number, statisticians usually produce three. The expenditure approach to GDP — which many countries consider the best way to capture activity in a modern economy — measures consumption, investment and net exports.
The production approach instead tries to capture companies’ output minus their inputs. The income approach estimates what individuals and businesses earn and pay in tax. In theory, the three different approaches should equal each other.
Until 1993, China went a fourth way. Its material product scheme, the offspring of an approach pioneered in the Soviet Union, counted commodities and goods produced across state-run factories.
Eager to understand its own growth as it reopened to global trade, and under pressure to improve its data, Beijing drew on international guidance. Canada’s national statistical agency launched a partnership with the NBS in the 1990s.
All other large economies publish quarterly breakdowns of the expenditure approach to GDP, including investment, consumption and net exports. They also publish subcomponents of those broad categories, which can provide useful insights into what is driving the headline figures. […]
China does not publish this data. Emerging Advisors, a consultancy, says that across 40 emerging economies it tracks, only four others do not publish such quarterly data, and they are countries with economies based on hydrocarbons. “We can’t stress enough how abnormal this is for an economy of any significant size,” noted economist Jonathan Anderson in a report this year.
Instead, China publishes quarterly data based on the production approach, which is harder to analyse. The expenditure GDP data is only published in nominal terms for the whole year.
Indeed, its contribution to annual growth has remained positive throughout the property slowdown and implying some significant source of new investment.
Logan Wright, who leads the China research team at Rhodium, argues that the NBS has not “as far as we know” explained this “offset”.
Given the greater detail that is available, economists rely heavily on the fixed asset investment data to reconstruct the missing GDP data that they would get from other countries.
A recent study by the Reserve Bank of Australia, which cited the significance of Chinese demand for iron ore, used it as part of a series of calculations to estimate quarter-on-quarter expenditure breakdowns. A Brookings paper on provincial growth targets published in March also used it to derive infrastructure investment as a proportion of GDP.
In a 2020 paper, Holz, the Hong Kong academic, identified a “pattern” whereby “the NBS removes data from publication that reveal the poor quality of PRC statistics” at times when the figures “should show significant slowdowns”. Subsequent discontinuations have included the loss of a land sales data series in 2023 and the temporary suspension of youth unemployment data in the same year.
China’s data is “low credibility” but people will not “throw . . . [it] out the window”, says Rosen, pointing to the need for “reference points” for trillions of dollars of existing foreign direct investment in China.
There is evidence that the NBS has for years adjusted the data it receives from local governments, often downwards, to counteract regional over-reporting. Hsieh and his co-authors in 2019 estimated that these adjustments averaged 5 per cent of total GDP each year from the mid-2000s, but were still insufficient to counter such over-reporting.