However, there are still issues related to transparency and disclosure.
China’s National Bureau of Statistics’ (NBS) seasonally adjusted factors and the quarterly GDP values after seasonal adjustment are not released to the public. Only the seasonally adjusted quarter-on-quarter growth rates are announced. The NBS has not published any detailed manual or technical note about China’s national accounts on its website (unlike its international peers).
More importantly, in contrast to the statistical authorities in other countries, NBS officials often go beyond the professional mandate of statisticians. For instance, the NBS spokesperson, during the announcement of China’s first quarter GDP figure, reiterated progress made in trade talks with the US. The impression given is the NBS is propagating the official message irrespective of the statistical truth.
Another well-known issue is that of discrepancies between provincial and national GDP growth figures. Gross regional product (GRP) estimates form part of the national accounts but are conducted by statistical bureaus within local provincial governments.
The methodology of GRP is similar to GDP but the identification of local economic activity is rather challenging.
Due to competition among local governments, there is an incentive to misreport the economic activities of large corporates in the various provinces. As a result, GRPs are usually double-counted and exaggerated. To rectify this issue, the NBS will take over the accounting of provincial GDP figures and produce GRPs on a consolidated basis from 2019.
At the national level, ANZ Research’s concern is the real GDP growth rate.
It is obtained by deflating the gross value added of different activities by different price indices. For example, the industrial value added can be deflated by the producer price index (PPI). Fixed-asset investment price index and sub-indices of consumer price index (CPI) will be applied to construction and other activities such as catering or healthcare. However, price indices are not available for some of the services sector.
As substitutes, the sub-indices of CPI are employed as deflators. In addition, the real growth of some activities is deducted from volume extrapolation with appropriate volume indicators.
However, what matters is the real value added of service activities.
There are significant differences between the CPI and GDP deflator of the services sector. On average, the GDP deflator is 2.5 per cent higher than CPI before Q3 2017; subsequently, it is 0.4 per cent lower than CPI.
The inconsistent price information casts doubt on the recent strong growth in China’s services sector.