CCR2 International Credit Management
Getting the facts straight
Understanding the true nature of Chinese economic performance may require more than the official figures
Peter Williamson Honorary professor of international management, Cambridge Judge Business School
China’s official statistics on growth in gross domestic product (GDP) – 6.9% in 2017 and 6.8% in the year’s fourth quarter – often spark debate on whether the numbers from China’s National Bureau of Statistics accurately reflect such a huge, sprawling, and fast-changing economy. To address this issue, our study – entitled
An alternative benchmark for the validity of China’s GDP growth statistics and published in the Journal of Chinese, Economic and Business Studies – calls for an alternative ‘bottom-up index’ focused on revenue and gross margin at 150 large companies listed on major Chinese stock exchanges. These more transparent measures – from
audited public companies reflecting 19 industries ranging from cars and retail, to
Jochem Hoenderop Researcher, Amsterdam School of Economics
banking – present a more detailed picture of China’s economy.
Support and challenge Our findings both support and challenge the official Chinese government version of the country’s economic growth: while the study’s new ‘China-150 Growth Index’ closely tracks the official GDP figures over the medium term (the 2010-2016 study period), the new index’s benchmarks suggest that growth in Chinese GDP has been “more volatile between years” than reported in official figures. This was due in part to short-term effects
of price movements and supply-demand shifts in different industry sectors, as reflected in the new index’s negative
Simon Hoenderop Former economist, Royal Dutch Shell
recorded growth in some quarterly periods for metals and mining, insurance, and financial services.
Need for caution “These results would suggest that financial markets and other interested parties should take the officially reported rates of Chinese rates of growth as serious indicators of the actual economic situation over the medium- term,” the study says. “At the same time, our findings would
caution against too much reliance on reported numbers quarter by quarter, and even year by year. It would seem prudent to compare the reported growth rates with alternative benchmarks, including those developed in this paper, in order to reach a
It would seem prudent to compare the reported growth rates with alternative benchmarks, including those developed in this paper, in order to reach a more informed understanding of short-term economic developments in China
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www.CCRMagazine.com
April 2018
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