The problems measuring China’s GDP
The fact that a large and rising share of economic activity in the country consists of nonproductive investment that isn’t correctly written down means two things. First, the relationship between Chinese GDP growth and growth in the real economy isn’t consistent. Second, Chinese GDP growth is not comparable with that of other countries. Those with an accounting background would say that what in other countries would be expensed is in fact capitalized in China: this approach necessarily must result in faster growth and higher asset values on paper in China compared to the underlying value of the economic activities themselves. More specifically, GDP growth in China will overstate the relative growth in output for many years, until, basically, the country reaches its debt constraints, after which GDP growth will be understated mainly because the same amount of “real” growth will be measured against an artificially high base.
China’s Economy Needs Institutional Reform Rather Than Additional Capital Deepening
By: Michael Pettis – Peking University
New indexes for measuring Chinese GDP
China reported a year-over-year GDP growth of 3.2% for the second quarter. How reliable are these statistics? Ferrara and al. developed three indexes to measure China’s economic activity and argue that annual growth is most probably lower that what is being reported.
An Index related to China’s international trade:
An index that tracks China’s job openings:
An index that tracks China’s household consumption:
Is China’s economic growth lower than officially announced?
By: Laurent Ferrara, Alice Froidevaux, Thanh-Long Huynh – SKEMA Business School, QuantCube Technology
