China 2016 GDP: Growth or Inflation?

China Gross Domestic ProductThe National Bureau of Statistics (NBS) declared on its website that it started using a new methodology dedicated to better reflect the contribution of innovation to growth. This change occurs on the background of growing doubts surrounding the government statistics.

That is what feed a little more the skepticism on the reliability of official statistics in China. China has once again changed the way to calculate its gross domestic product (GDP) resulting in a revision to the increase of the data for recent years. The National Bureau of Statistics (NBS) said on its official website that it started using a new methodology with the aim of a better reflection of the contribution of innovation to growth. In practice, the expenditure for research and business development could be recorded as a share of the fixed capital and not as an intermediate consumption.

This new form of counting, which will be implemented upon publication in mid-July 2016 of the second growth quarter was applied by the SNB to review its figures since 1952 … For the last year, the size of China’s economy is inflated with the equivalent of 120 billion euros. Although slightly reviewed upwards, the growth rate in 2015 remains around 6.9%, he lowest since a quarter of a century.

What are the alarmist activity indicators of China’s inflation?

On the other hand, for 2013 China’s growth increased to 7.8%, against 7.7% previously in 2012. In total, the figures have been revised to 22 for the last 63 years, essentially increasing. The SNB had already unveiled a methodological change in September, leading to calculate GDP for each quarter independently and not on a cumulative basis since the start of the year.

This change occurs on the background of growing doubts surrounding the Chinese government statistics on the growth, while widening the gap with alarmist activity indicators. These doubts are based in particular on the rapid publication of the figures, two weeks after the end of each quarter while taking the given size of the country. Above all, they don’t correspond to the sum of the separate figures of the provinces and regions. Some analysts believe that China’s growth could be around 4.5% rather than the 7% official.

What do you think about that ? Do you believe that China is an economy giant or just an inflated belly balloon?

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