Researchers and analysts have long questioned the veracity of China’s official GDP figures and a new study has raised even more doubts. In the study published by the Federal Reserve Bank of San Francisco, authors John G. Fernald and others use import data and other indicators as proxies for economic activity to reveal that China’s GDP figures have been far too steady in recent years.
The authors consider imports to be a reliable indicator because countries tend to measure it accurately for tariff purposes and they can be verified through trading partners’ export statistics. Moreover, they suggest that, in countries with robust statistical systems, imports and GDP are closely related and vice versa for economies with poor statistical systems.
In their analysis, the authors compare China’s official GDP figures with import data and 13 alternate indicators of economic activity in the country. These include electricity consumption, industrial production, rail freight activity and property construction.
They find that China’s imports are only weakly correlated with its official GDP figures. In contrast, the other 13 indicators of economic activity have a greater association with imports with the strongest relationship between electricity consumption and imports.
Specifically, they find that, compared to imports and the other indicators, China’s official GDP growth is far too stable suggesting spurious underlying figures. The authors note that, though Chinese GDP numbers had improved in terms of accuracy post the global financial crisis, they have been inaccurate since 2013 and do not adequately capture the fluctuations in Chinese economic activity. However, the authors do note that as of mid-2019, GDP has been more in sync with other indicators of economic activity.
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