China
Volts Don’t Lie? An Alternative Approach to Calculating China’s Growth
By Tom Orlik China’s Vice Premier Li Keqiang said in 2007 that the GDP data for the world’s second largest economy was ‘man made’ and not to be trusted. Instead, the then Party Secretary of Liaoning Province said, he relied on electricity production, train freight and bank loan data as a guide to the state of the economy. Last month, CRT looked at the strengths and weaknesses of China’s GDP data, concluding that the government’s methods for calculating the size of the world’s second-largest economy had improved but still left something to be desired . Are electricity statistics a better guide to growth? Electricity output has a special place in the world of China’s economic data. Officials might lie, it is believed, but volts do not. Ever since economists cried foul on the 1998 GDP data, citing the difference between falling growth in production of electricity and stable growth in GDP, the markets have viewed the electricity data as a proxy for overall growth. That makes some sense. The manufacturing and industrial sectors are major consumers of electricity; changes in output should be reflected in changes in electricity production. Over the last several years, growth in electricity output has moved more or less in line with growth in industrial output. With some of China’s main growth indicators putting in a dismal performance in the last few months, and concerns about a hard landing for the economy, the electricity data provides an optimistic counterpoint. Following a weak April and May, electricity output was up 16.2% year-on-year in June, suggesting a strengthening economy. That contrasts with a weak reading from the preliminary HSBC PMI report in July, which suggested contraction is on the cards. But before breaking out the celebratory baijiu and heading out for karaoke, China’s economic policy makers should consider a few shortcomings of the electricity output data as a guide to growth: – Changes in the structure of the economy change the relationship between growth and electricity consumption. For example, a shrinking role for manufacturing and a larger role for services – something China’s economic planners have been pushing lately — reduces growth in electricity production but not necessarily growth in GDP. And even with no change in the structure of industry, many manufacturers have off-grid generators that they can switch on or off without affecting electricity production data – which only captures on-grid activity. – China’s electricity producers have their own problems. Hydropower accounts for 16% of China’s electricity output. Droughts in April and May meant generators ran into difficulties. Heavy rain has now brought them whirring back to life. Neither the drought nor the flood said much about the underlying strength of demand for electricity. Changes in costs for coal – the main input into electricity generation – can also play havoc with production. – Households account for 12% of electricity consumption and their demand is affected mainly by the weather – which determines whether central heating and air conditioners are on or off – with little relation to changes in growth. All of these factors mean the relation between electricity production and economic growth is difficult to predict. Investors who pay too much attention to electricity as a proxy for growth can misread the signs. This was the case in the first half of 2009, when growth in electricity output stayed in negative territory till May – partly because of a slow recovery in the electricity intensive aluminum sector, but the rebound in the rest of the economy was strong. In the second half of 2011, optimism about the outlook based on June’s strong electricity data may be similarly misplaced. Tom Orlik’s new book Understanding China’s Economic Indicators was released July 12
By Tom Orlik China’s Vice Premier Li Keqiang said in 2007 that the GDP data for the world’s second largest economy was ‘man made’ and not to be trusted. Instead, the then Party Secretary of Liaoning Province said, he relied on electricity production, train freight and bank loan data as a guide to the state of the economy. Last month, CRT looked at the strengths and weaknesses of China’s GDP data, concluding that the government’s methods for calculating the size of the world’s second-largest economy had improved but still left something to be desired . Are electricity statistics a better guide to growth? Electricity output has a special place in the world of China’s economic data. Officials might lie, it is believed, but volts do not. Ever since economists cried foul on the 1998 GDP data, citing the difference between falling growth in production of electricity and stable growth in GDP, the markets have viewed the electricity data as a proxy for overall growth. That makes some sense. The manufacturing and industrial sectors are major consumers of electricity; changes in output should be reflected in changes in electricity production. Over the last several years, growth in electricity output has moved more or less in line with growth in industrial output. With some of China’s main growth indicators putting in a dismal performance in the last few months, and concerns about a hard landing for the economy, the electricity data provides an optimistic counterpoint. Following a weak April and May, electricity output was up 16.2% year-on-year in June, suggesting a strengthening economy. That contrasts with a weak reading from the preliminary HSBC PMI report in July, which suggested contraction is on the cards. But before breaking out the celebratory baijiu and heading out for karaoke, China’s economic policy makers should consider a few shortcomings of the electricity output data as a guide to growth: – Changes in the structure of the economy change the relationship between growth and electricity consumption. For example, a shrinking role for manufacturing and a larger role for services – something China’s economic planners have been pushing lately — reduces growth in electricity production but not necessarily growth in GDP. And even with no change in the structure of industry, many manufacturers have off-grid generators that they can switch on or off without affecting electricity production data – which only captures on-grid activity. – China’s electricity producers have their own problems. Hydropower accounts for 16% of China’s electricity output. Droughts in April and May meant generators ran into difficulties. Heavy rain has now brought them whirring back to life. Neither the drought nor the flood said much about the underlying strength of demand for electricity. Changes in costs for coal – the main input into electricity generation – can also play havoc with production. – Households account for 12% of electricity consumption and their demand is affected mainly by the weather – which determines whether central heating and air conditioners are on or off – with little relation to changes in growth. All of these factors mean the relation between electricity production and economic growth is difficult to predict. Investors who pay too much attention to electricity as a proxy for growth can misread the signs. This was the case in the first half of 2009, when growth in electricity output stayed in negative territory till May – partly because of a slow recovery in the electricity intensive aluminum sector, but the rebound in the rest of the economy was strong. In the second half of 2011, optimism about the outlook based on June’s strong electricity data may be similarly misplaced. Tom Orlik’s new book Understanding China’s Economic Indicators was released July 12
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Volts Don’t Lie? An Alternative Approach to Calculating China’s Growth
China
China’s November 2024 Economy: Navigating Mixed Signals and Ongoing Challenges
In November 2024, China’s economy exhibited mixed results: industrial production rose by 5.4%, while retail sales grew only 3%, below forecasts. Fixed asset investment also faltered. Policymakers are anticipated to introduce measures to stimulate domestic demand and combat deflation.
China’s economy showed mixed performance in November 2024, with industrial production and exports showing resilience, while retail sales and fixed asset investment underperformed, amid ongoing challenges in the property sector. Policymakers are expected to implement targeted fiscal and monetary measures to boost domestic demand and address deflationary pressures.
The National Bureau of Statistics (NBS) has released China’s economy data for November 2024, revealing a mixed performance across key indicators. Retail sales grew by 3 percent year-on-year, a significant slowdown from October’s 4.8 percent growth and well below the 4.6 percent forecast. Industrial production, however, showed resilience, rising by 5.4 percent and exceeding expectations of 5.3 percent growth.
The property sector continued to drag on the broader economy, with real estate investment contracting by 10.4 percent for the January-to-November period, further highlighting the challenges in stabilizing the sector. Fixed asset investment also fell short of expectations, growing by 3.3 percent year-to-date, down from 3.4 percent in October.
In November, China’s industrial value added (IVA) grew by 5.4 percent year-on-year (YoY), slightly accelerating from the 5.3 percent recorded in October. This modest improvement reflects continued recovery in key industries, supported by recent stimulus measures aimed at stabilizing the economy.
The manufacturing sector led the growth, expanding by 6.0 percent YoY, while the power, heat, gas, and water production and supply sector grew by 1.6 percent. The mining industry posted a 4.2 percent YoY increase. Notably, advanced industries outpaced overall growth, with equipment manufacturing and high-tech manufacturing rising by 7.6 percent and 7.8 percent YoY, respectively, underscoring the resilience of China’s innovation-driven sectors.
Key product categories showed robust output gains in November:
From January to November, IVA increased by 5.8 percent YoY, maintaining steady growth over the year despite headwinds from a slowing property market and external uncertainties.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
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China
Ukraine war: 10% of Chinese people are willing to boycott Russian goods over invasion – new study
Since Russia’s 2022 invasion of Ukraine, some Chinese citizens express dissent through potential boycotts of Russian goods, reflecting a complex relationship despite government support for Russia.
Since Russia invaded Ukraine in 2022, the Chinese government has been criticised for its refusal to condemn the war. In 2024, the economic and diplomatic relationship between the two nations appears stronger than ever.
Because of strict censorship and repression imposed by the Chinese Communist Party (CCP), it is difficult to know the extent to which the general public shares their government’s support of Putin’s regime. But a newly published study I carried out with colleagues found that more than 10% of Chinese people surveyed were willing to boycott Russian goods over the war in Ukraine.
This is a surprisingly large figure, especially since existing surveys indicate that Chinese people hold a broadly positive view of their neighbour. We used a representative sample of 3,029 Chinese citizens for this research, to dig into public attitudes to Russia. The survey was done in 2022 after the Ukraine invasion.
We were aware that due to widespread censorship, our participants might not be willing to give honest answers to questions about Russia’s actions in Ukraine. They might also not feel safe to do that in a regime where disagreement with the CCP’s position is often met with harsh punishment. This is why we asked them to tell us if they would be willing to boycott Russian products currently sold in China.
We felt this question was a good indicator of how much the participants disapproved of Russian foreign policy in Ukraine. More importantly, we were also curious to find out whether Chinese citizens would be willing to take direct political action to punish Russia economically for its aggressive behaviour.
In our study, we split respondents into the three different ideological groups in China: “liberals”, who support the free market and oppose authoritarianism; “the new left”, who sympathise with the policies pursued in China under Mao Zedong; and “neo-authoritarians”, who believe the Russian-Ukrainian conflict is an extension of the rivalry between authoritarian China and the liberal United States. These groups were based on the main political beliefs in China.
We found that liberals were most likely to say they were willing to boycott Russian products. Liberals believe that China should work with, rather than against, western democracies. They also place a high value on human rights and democratic freedoms. Because of their beliefs, they are likely to think that Russia’s actions against Ukraine were unprovoked, aggressive and disproportional.
Chinese and Russian economic and diplomatic relations seem closer than ever in 2024.
American Photo Archive/Alamy
The new left and neo-authoritarians we surveyed were more supportive of Russian products. The new left see Russia as a close ally and believe that Nato’s expansion in eastern Europe was a form of aggression. Neo-authoritarians, on the other hand, believe that supporting Russia, an allied autocracy, is in China’s best interest.
Boycotting Russian goods
Asking Chinese participants if they are willing to boycott Russian products might seem like a simple matter of consumer preferences. However, our study reveals a great deal about the way in which regular citizens can express controversial political beliefs in a repressive authoritarian regime.
Boycotting products of certain companies has long been studied in the west as a form of unconventional political action that helps people express their beliefs. However, in the west, boycotting certain products is simply one of many ways people are able to take political action. In a country such as China, boycotting a Russian product might often be the only safe way to express disagreement with the country’s actions.
This is because citizens do not have to tell others they chose not to buy a product, and their actions are unlikely to attract the attention of the authorities.
Since Russian goods are readily available to Chinese consumers and China is encouraging more Russian exports to reach its market, the Russian economy could be significantly affected by an organised boycott campaign in China. The considerable level of support for a boycott expressed by some of our participants, as well as previous acts of solidarity with Ukraine in China, suggest that such a campaign could already be taking place in the country.
This could harm Russia because it regularly exports a number of different products such as meat, chocolate, tea and wine to China. These goods made up 5.1% of China’s total imports in 2023 – and this figure is likely to increase if Russia becomes more isolated from the west, and therefore more dependent on China for its trade.
While 5.1% of the Chinese market might seem like a low figure, China is home to over 1.4 billion people. In this context, even a small boycott could result in a serious loss to Russian companies.
Our research shows that Chinese citizens don’t always support the official position of the communist party. It also shows that many people there will express even the most unpopular political opinions – if they can find a safe way to do it.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
China
Australia Can Enhance China’s Credibility in the CPTPP
In early 2024, China sought to join the CPTPP, potentially offering modest economic benefits to Australia. Key reforms include limiting state-owned enterprise subsidies, enhancing data flows, and banning forced labor.
China’s Interest in the CPTPP
In early 2024, China expressed a keen interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement involving eleven Pacific Rim economies and the United Kingdom. This move is anticipated to yield modest economic benefits for Australia. However, it also opens the door for vital reforms in areas such as the control of subsidies for state-owned enterprises, allowing free cross-border data flows, and prohibiting forced labor practices.
Economic Implications for Australia
A May 2024 report from the Australian Productivity Commission indicated that China’s accession to the CPTPP might raise Australia’s GDP by only 0.01%. This modest gain isn’t surprising, given Australia’s existing preferential trade arrangement with China through the Regional Comprehensive Economic Partnership. Nonetheless, the CPTPP encompasses more than just tariff reductions, focusing on broader trade principles and standards.
Reform Commitments Required from China
For China to become a CPTPP member, it must demonstrate adherence to high-standard rules initially developed with the country in mind. This commitment will help alleviate concerns among member nations like Japan and Canada, particularly regarding China’s economic practices and geopolitical tensions, such as those with Taiwan. Membership would necessitate reforms, including limiting SOE subsidies, enabling freer data flows, and banning forced labor, with significant penalties for non-compliance.
Source : Australia can encourage China’s credibility in the CPTPP
- China’s November 2024 Economy: Navigating Mixed Signals and Ongoing Challenges
- Ukraine war: 10% of Chinese people are willing to boycott Russian goods over invasion – new study
- Australia Can Enhance China’s Credibility in the CPTPP
- Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
