GDP data are ‘too precise’

China GDP releases are starting to look like near-perfect landings each time in all kinds of weather conditions and visibility.

Yet another quarter has just gone by and already statisticians have reported that growth slowed a sliver from Beijing’s 2015 target of 7% recorded for the first half of the year.

Now it is 6.9%, slightly above the Reuters consensus forecast from 50 economists of 6.8%.

It is difficult to understate just how precise such figures are in the grand scheme of economic data reporting. It is also difficult to ignore just how remarkable this stability is, considering the Chinese authorities are trying to rebalance the entire economy away from reliance on exporting manufacturing goods toward domestic consumer spending.

And that worry about a Chinese growth slowdown was one of the main reasons cited by the US Federal Reserve for holding off last month on its first rate rise in nearly a decade.

That is also not to mention that China growth concerns dominated the IMF and World Bank’s latest meetings in Lima, Peru.

In the past three years, Chinese GDP data as reported have only missed the Reuters polls consensus three times, and on each occasion it was because the reported growth figure beat it by just 0.1 percentage point.

For the periods of fourth quarter in 2013 to to the first quarter of this year, the reported figure was exactly on forecast.

Other large and important global economies are nowhere near as accurate. US growth data have taken even the most pessimistic forecaster completely off guard on several occasions since the financial crisis, most recently in the first quarter of last year.

It seems implausible that economists, who are often widely panned as a group for failing to predict economic turning points, are uncannily able to nail Chinese GDP within a few tiny slivers of a percentage point each and every time.

Many analysts and investors, including those with plenty of experience covering China, increasingly are challenging the growth data.

The most obvious difficulty most people have in accepting the data is the speed at which the official numbers are published.

Reuters


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