Monday, January 18, 2021

China's fourth quarter GDP grows 6.5% year-on-year, beats expectations as recovery gains momentum

China’s economic recovery beat analyst expectations in the fourth quarter, expanding 6.5% from a year earlier, data from the National Bureau of Statistics showed on Monday.



Marian Ruccius said...

Ok, once the Chinese Government data falsification is removed, we may be talking about 2% real GDP growth

Marian Ruccius said...

A "sizable gap suggests cumulative Chinese growth over the years could be overstated by as much as 65 percent. Compared with other countries in the sample, the difference between the official and estimated numbers for China is large. In fact, the only country with a larger gap than China is Myanmar. India also has a large gap between actual and estimated, about 39 percent, although this gap is still notably smaller than China’s. Other emerging countries, like Brazil and Russia, have significantly smaller gaps between actual and estimated."

And one would do well to recall Alwyn Young's work: oung, Alwyn (August 1995). "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience" (PDF). The Quarterly Journal of Economics. 110 (3): 641–680.

Tom Hickey said...

Scott Sumner looks at how China computes its figures.

In the past, commenters always tell me the Chinese data is fake. I provide detailed explanations as to why the data should be taken seriously. Commenters then ignore my detailed explanations, and keep repeating the same claims. So I’m going to treat the Chinese data as being roughly accurate.

The Money Illusion
This post is not about China
Scott Sumner | Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University

Ahmed Fares said...

From an article by Michael Pettis titled "What Is GDP in China?"

The third set of problems with GDP occurs in a very limited number of cases globally (today, China is the main example). But the implications are much greater. This has to do with whether GDP is even being used as a proxy for economic activity. In China, reported GDP does not tell observers about the economy’s performance; rather, it tells people how rapidly Beijing thinks it can impose the necessary adjustments on the Chinese economy. This is because GDP means something different in China than it does in most other major economies.

In any economic system, GDP is supposed to be a measure of output, and in most countries that is exactly what it measures, however messily. The economy does what it does, in other words, and at the end of a given time period, statisticians measure the things economists agree to include in the relevant calculations, and they express the change over time as the scale of GDP growth for that period.

This is not what happens in China, where GDP is actually an input determined annually as the country’s GDP growth target. The growth target of a given time period is decided well ahead of time, and to achieve it, various entities, including local governments, engage in the requisite amount of activity, usually funded by debt. As long as China has debt capacity, and as long as it can postpone the writing down of nonproductive assets, Beijing can achieve any growth target it desires.

source: What Is GDP in China?

Ahmed Fares said...

I don't know about Tiger Mom parenting, effectively channeled corruption, or "culture-specific nets", whatever those are. I do know, however, that Solow catch-up growth is not about TFP increase or the diffusion of innovation!

There are basically two kinds of catch-up growth. The first is where you cheaply copy innovations from countries at the technological frontier. That's what Tyler is talking about. But the second, Solow catch-up growth, is far simpler - it's just about capital accumulation.

Countries don't start out with capital - they have to build it. So they save some of their production each year and use it to build productive capital (or trade it to other countries for capital). They do this until they have so much capital that they hit the point of diminishing returns, and depreciation starts to get so costly that it doesn't make sense to build any more capital (per worker).

But a lot of Chinese catch-up growth - about two-thirds, according to a standard decomposition - looks just like the classic save-money-and-build-capital thing.

source: How China got rich

*Solow catch-up growth refers to Robert Solow and the Solow Model

Robert Merton Solow, GCIH (/ˈsoʊloʊ/; born August 23, 1924), is an American economist whose work on the theory of economic growth culminated in the exogenous growth model named after him. He is currently Emeritus Institute Professor of Economics at the Massachusetts Institute of Technology, where he has been a professor since 1949. He was awarded the John Bates Clark Medal in 1961, the Nobel Memorial Prize in Economic Sciences in 1987, and the Presidential Medal of Freedom in 2014. Four of his PhD students, George Akerlof, Joseph Stiglitz, Peter Diamond and William Nordhaus later received Nobel Memorial Prizes in Economic Sciences in their own right.

Tom Hickey said...

From an article by Michael Pettis titled "What Is GDP in China?"

The Chinese understand MMT. The only relevant issue is real resources. They just allocate the necessary funding (fiscal flow) to hit their target without causing inflation. (Michael Hudson explained it to them.)

Tom Hickey said...

BTW, this is what "industrial policy" means. Goes back to the American system of Hamilton and List.

Matt Franko said...

Doesn’t matter.,,, Shanghai index has broken out to new meaningful post covid highs,,, that’s what you want to look at.,,