China’s Economic Growth Slows Anew, Economic Data Questioned

China reported slower economic growth for the sixth consecutive quarter

From Businessweek/Bloomberg.

China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound.

Gross domestic product expanded 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said today in Beijing. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists. Industrial production increased at a slower pace in June while retail sales growth decelerated.

Today’s data painted a mixed picture from a pickup in fixed-asset investment that could signal the economy is stabilizing to the warning sign that electricity output failed to increase in June from a year earlier.

Yet the accuracy of China’s declared economic figures are being questioned.

From another Bloomberg article

The figures that go into China’s gross domestic product are “man-made” and “for reference only,” Li Keqiang, then a regional Communist Party head, said in 2007.

The comments by Li, now a vice premier who’s expected to become premier next spring, were revealed in a diplomatic cable published by WikiLeaks in late 2010. Li’s remarks are especially relevant as China announced today that the economy expanded 7.6 percent last quarter from a year earlier, the slowest pace in three years.

Investors, bankers and economists face a host of difficulties in interpreting the numbers from China’s statistics bureau, Bloomberg Businessweek reports in its July 16 issue. Combining all officially reported provincial GDP numbers for last year produces a total exceeding national GDP by about 10 percent, Ma Jiantang, head of the National Bureau of Statistics, said in February. Ma said that is due partly to double counting of items including factory production and that his bureau was trying to correct the issue…

One new effort to gauge the economy is the China Beige Book, a quarterly survey of about 2,000 bankers and company executives, modeled on the U.S. Federal Reserve’s Beige Book. It measures growth in eight key industries across China’s major regions, said Leland Miller, president of New York-based CBB International LLC, which publishes the report.

Chinese policy makers are trying to address the government’s statistical shortcomings. More data are now directly reported to Beijing, as opposed to being first filtered through local party offices. The statistics bureau has moved to standardize data collection by China’s many ministries and industrial associations.

The bureau has also worked with the United Nations, the International Monetary Fund and the Organization for Economic Cooperation and Development to improve its tracking of the economy.

China still tends to treat its data gathering as a national secret, said Anne Stevenson-Yang, co-founder of Beijing-based J Capital Research, which analyzes equities. She cited the government’s refusal to release the weighting of goods tracked to compile its consumer price inflation index.

Statistics can be manipulated to suit political goals.

Nevertheless, market price indicators—such as struggling commodity prices, falling yuan and faltering Chinese equity markets (Shanghai Index)—does not seem to be consistent with the above report.

Unreliable and contested figures only reveals of the extent of political impasse and adds to the uncertainty of current conditions.