Read on Twitter
1/ Lots of good analysis on China's real GDP today on supply-side factors/exports powering the recovery, absent domestic demand--and how this is bad for imbalances. Close examination of official stats, however, suggests those factors might also be overstated. Thread:
2/ First, my pet-peeve: fixed-asset investment. As expected, 2019 FAI was revised down. This isn't new; revisions always happen. What's really interesting is how far back these revisions go, and how widely current (final, for now) figures differ from initially published levels.
3/ Multiple reasons for this; stats base of comparison (FAI only incl Rmb5m+ projects) might narrow b/c some past projects have failed, for example. But if we take this at face value, then officials have consistently overestimated FAI performance over past decade, at least.
4/ FAI doesnt directly affect GDP reporting (more tied to primary, secondary, tertiary value-added output) and FAI is affected by land sales (which I haven't stripped out; sorry @nerysinchina!) But the GDP figures have also been adjusted, namely by way of the quarterly values.
5/ This more technical, but quarter-on-quarter growth rates have been adjusted significantly. This has adjusted the weighting of each quarter relative to GDP. Why does that matter? B/c weight of Q1 (height of Covid disruptions) has been minimized, while Q2-Q4 has been enhanced.
6/ That has (slightly!) played down the effects of the lockdowns etc in Q1, while played up the growth recovery story since April. By our back of envelope calculations, without those adjustments, 6.5% yoy Q4 real GDP would've delivered 1.9-2% real growth for 2020.
7/ That doesn't matter too much in the grand scheme of things; what's a few percentage points? But, the extent/scope/complexity of these revisions suggests high degree of political anxiety over the economy. That's could influence future stimulus + expansion of state sector
8/ It also raises qs around the efficacy of past (& future) stimulus; the viability of investment projects; resource (mis)allocation; bad debt; and attempts to address these things. Do past revisions illustrate that officials have less influence over econ momentum than thought?
9/ This isn't to discredit growth in China; there is ample evidence of that. But worsening transparency also clouds ability to understand what's going on. And if downward revisions occur each year, suggests then that headline growth this year is also worse than reported. (end)
