Numbers falling


In the second quarter of this year, official Chinese data showed economic growth of 6.2%, close to Beijing’s target and within a percentage point of what it has reported every quarter for the past 4½ years.

A few months earlier, satellites monitoring Chinese industrial hubs suggested parts of the world’s largest trading economy were contracting. An index of Chinese industrial production created by a multinational manufacturer was pointing to lower growth than official figures. And a web-search index used to gauge how many workers return to their jobs after the Lunar New Year holidays was down sharply from a year earlier.

Beneath China’s stable headline economic numbers, there is a growing belief among economists, companies and investors around the world that the real picture is worse than the official data. That has analysts and researchers crunching an array of alternative data—from energy consumption to photos taken from space—for a more accurate reading.

economists who have dissected China’s GDP numbers say more accurate figures could be up to 3 percentage points lower, based on their analysis of corporate profits, tax revenue, rail freight, property sales and other measures of activity that they believe are harder for the government to fudge.

In July, China reported 4.8% year-over-year growth in industrial output, its slowest pace in 17 years. A large multinational company had seen the signs much earlier. Eaton Corp., a global manufacturer of electrical components and power systems for buildings, industrial facilities, planes and other machinery, has about $2 billion sales in China. Last year, its in-house index showed 2.7% industrial production growth while China’s official reading was above 5% over the course of 2018. The company’s index estimated 2.5% growth for the first half of 2019.

China’s automotive sector, which makes up about a 10th of GDP, has been in a slump since late 2018. The China Association of Automobile Manufacturers, the organization that puts out official sales numbers and forecasts, had earlier estimated that 2019 sales would be flat year on year. In the first seven months of the year, they fell 12.8%. Despite that, the official forecast is now for a 5.4% full-year decline.

Analysts at Bank of America Merrill Lynch are less optimistic. They forecast a 3.6% drop in car sales at the start of 2019 and now expect a 12% drop for the year.


China’s central bank moved on Friday to give the country’s slowing economy a jolt, saying it would essentially inject $126 billion into the financial system as Beijing fights an escalating trade war with the United States and contends with a dangerous addiction to debt at home.

The move signaled China’s willingness to ease up on a campaign to curb the borrowing that has weighed on growth in the country’s economy, the world’s second largest, and potentially to open its lending machine up even further if the trade dispute begins to take an even greater toll.

The People’s Bank of China said that it would cut its reserve requirement ratio — the amount of cash from deposits that lenders must keep in their coffers — by 0.5 percentage point on Sept. 16, which would add about 900 billion renminbi to the financial system.

Some banks will see their reserve ratio cut by one percentage point to promote lending to small businesses and private enterprises. Senior officials also indicated this week that they planned to loosen restrictions on local governments related to raising money for infrastructure projects.

More WSJ: “Chinese imports of everything from raw materials to high-tech products dropped 5.6% in August compared with a year earlier, the same decline as July, the Chinese customs data showed. Although August’s drop was smaller than economists had expected, a downturn in demand highlights the challenges that Beijing faces as it seeks to prop up growth that has fallen to its lowest rate in more than a quarter-century.”

No big deal, move along.

2 Responses to “Numbers falling”

  1. feeblemind Says:

    Anyone notice that the Chinese keep using the same tools to stimulate their economy, cutting reserve requirements and encouraging new lending? Apparently they don’t know what else to do.

    That in itself is interesting.

  2. feeblemind Says:

    Report: Chinese Communists Fear Xi Jinping Preparing Mao-Style Purge

    Chinese Communist Party chief Xi Jinping has long faced dissent from Communists who think he is insufficiently loyal to Marxist dogma, but he is increasingly provoking unease among Chinese Communist Party (CCP) elders who fear he might be a little too Communist in his outlook – or, more specifically, Maoist.

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