China: steering by guesswork?
Political leaders who struggled with the Depression of the 1930s worked blind: they had no GDP measure, but managed as best they could on figures of the freight being carried by the railways, stock market prices, and a few industry indices.
Things are better now, of course. Except, maybe, in China, where nobody believes the official statistics, including the man tipped to take over as China’s Premier next March, Li Keqiang (pictured). In 2007, the Financial Times reports today, he told the US Ambassador that Chinese data was “man-made” and therefore unreliable. He used them “for reference only”, he added.
Instead, he relied upon electricity consumption, rail cargo volumes, and disbursement of bank loans to evaluate economic growth. Shades of the 1930s!
Why this might matter is that while China’s official GDP data is showing a growth rate of 8.1 per cent from the first quarter of 2011 to the equivalent period this year, Mr Li’s favourite measures are looking far less rosy. Electricity consumption rose just 0.7 per cent between March 2011 and March 2012, while rail cargo volumes are increasing at about half the rate they were last year, and banks extended fewer loans than expected.
So China’s economy may be slowing far more dramatically than the official figures make it seem. Running a massive economy on such shaky numbers is an accident waiting to happen. China’s government has been trying to slow the property boom which has left the more prosperous parts of the country littered with empty apartment blocks. In doing so, the FT’s Jamil Anderlini suggests, it may have been more successful than it yet realises.