China's Economic Statistics


The Wall Street Journal recently published an article on how China has stopped publishing important economic statistics. The article also implies that some economic statistics are manipulated. 

Getting reliable figures has always been a problem. Years ago I read a thorough analysis of Chinese figures that indicated China was overestimating its real GDP growth by 2%. I still use that correction. In recent years, it may be even larger. If 2% is a reasonable correction, it means that China's real economic growth rate in 2024 was around 3%, not the reported 5%, which was about the 2024 U.S. real growth rate.

Many estimates come from private or non-government sources, as illustrated in this article. Some numbers have been almost impossible to get. Much of China's macro economy occurs and is reported at the provincial and local level. Local officials have always fudged the figures since their careers depend on their figures being equal to or greater than the goals given to them by the national government. The situation has probably gotten worse since local and provincial revenue has depended heavily in the past on land sales and deals with housing developers.

Chinese government statistics were reporting youth unemployment at over 20% before the stat stopped being publish. A "revised" statistic reported 14%. Either way, these are high numbers; they include unemployment of recent college graduates.

There is conflicting data on the housing situation. It seems reasonable to assume that there are about 50 million housing units either empty or for sale. Many of the empty apartment units are owned by families as a major part of their savings. The recent fall in the market value of housing has reduced the value of total household wealth.   

It is impossible to tell what is the total yearly deficit of the entire country. Cumulatively, it is impossible to tell what the national debt/GDP ratio is. Estimates indicate it is higher than the U.S. national debt/GDP ratio.

Obviously local land sales to developers and residential construction have fallen even more since the data stopped being published.  On the other hand, the national government is investing huge new sums of money on industrial modernization and expansion, especially of new, critical industries. China, as usual, is building ahead of demand, hoping that economic growth and increased exports will catch up.  Also, some older industries such as steel and other building materials have excess capacity because demand has fallen, particularly for housings and probably for big public infrastructure projects. This is one reason for rise in exports and Chinese building of overseas infrastructure projects, especially in Asia.

There is massive over capacity in the electric vehicles (EVs) industry. Even as some of the early companies in the industry go bankrupt, new producers are entering the industry. Some have ties to e-commerce, social media and telecomm companies; their technology is apparently transferable to the electronics and "infotainment" components of EVs.

While China is the world's largest producer and installer of solar panels, it is also the world's largest producer, by far, of coal. China is expanding coal production to generate more electricity. The government promises that coal production will begin to decrease after 2030.

Related, Chinese cities have some of the worst air pollution in the world.

China is trying to stimulate domestic consumption but with the fall in the value family wealth, high unemployment among young consumers, and the uncertain impact of American tariffs on Chinese exports, it is hard to see how this will happen, at least in the near term.

Like in the United States, economic growth in China will mostly be a function of developing new technologies and selling into the global economy. 

For a detailed look at the Chinese economy, see my

China's Economy, Politics and Demography 

Comments

Post a Comment

Most Popular Posts

Adam Smith's Pin Factory

Image
Adam Smith - Our Founding Father ADAM SMITH VISITS A PIN FACTORY   Adam Smith’s description of a pin factory is on the first page of  The Wealth of Nations .  (Chapter 1 – “Of the Division of Labour”)  Drawings of pin factories of this period show workers using hand tools. Smith says the process can be broken down into 18 distinct steps, including packaging the pins. Smith mentions that pin factory workers were poorly paid, despite their high productivity.    Adam Smith says he visited a pin factory employing 10 men who produced 48,000 pins per day.  If each of the ten workers had done all the steps themselves, Smith says each worker could produce only 10 or 20 pins per day.  So the pin factory replaces 2,400 to 4,800 pin makers. The increase in labor productivity (output per person per day) is as high as 50 times that of individual pin makers.     This reduction in unit cost or average cost (AC) and the huge i...
Read more

Bilateral Oligopoly

Image
The best movie about the Gunfight at the O.K. Corral is titled My Darling Clementine. A great western - great cast, great photography.  DEFINITION OF A BILATERAL OLIGOPOLY Models of market structure assume that the demand side is represented by a large number of buyers.  The structure of the market, and the assumed market outcomes, depends on the number of suppliers and how they compete.  Suppliers either post one price or exploit their knowledge of buyer categories by using price discrimination.  Despite the comments about the key role of consumers in determining economic performance, consumers are fairly passive when the discussion focuses on imperfectly-competitive industries.  But many markets are not structured this way; the buyers are not passive consumers but large corporations that do not passively accept suppliers’ prices.  Net prices are actively negotiated.  These markets are often bilateral oligopolies. In a bilateral oligo...
Read more

The Stock Market Crash of 1929 and the Beginning of the Great Depression

Image
Famous Headline Introduction The usual reasons given for the Great Depression – the stock market crash of 1929 and the later collapse of the banking system – do not tell the whole story. Available economic data indicate (there were no national income accounts in 1929) that a recession had already begun before the stock market crash. The crash of October and November of 1929 was a catalyst that made the recession worse but the partial stock market recovery in early 1930 did not end the recession. Industrial production continued to fall quickly and unemployment rose rapidly in 1930. Continuing farm and businesses failures over the next two years wiped out thousands of small rural banks and threatened total financial collapse in early1933.  For a fuller explanation, we have to go back to the 1920s to see additional reasons for the origins and the rapid decline in output at the beginning of the Great Depression. We have to look at the int...
Read more

List of Posts By Topic

FIND POSTS BY CATEGORY CATEGORIES The theme of this blog is that innovation, not price competition, is the basis for understanding economic growth, competition, and analysis. And, like many other former college professors, I also digress. I Heard the News Today The Beginning of the Industrial Revolution Basic Concepts and Theory Market Behavior and Structure Market Dynamics and Information:  How Markets Work Economic Theory and Markets Demographics and Economics American Economic History American History Management World War I:  The Beginning of the 20th Century The Roman Republic and America - Differences and Some Possible Parallels Economic and Fiscal Policy Financial Markets and Investment Strategies Foreign Exchange Markets The United States American Foreign Policy and International  Relations Geopolitics and the Global Economy Geopolitics of Oil and Natural Gas Visionaries Humor, Satire, Whimsy I HEARD THE NEWS TODAY Tariffs and America's Economic War wi...
Read more

Government Finance 101. Fiscal Policy: Welcome to Alice in Wonderland

Image
    PRELIMINARY SUMMARY OF FISCAL YEAR 2025 BUDGET   The Congressional Budget Office (CBO) made their latest projection in January, 2025. The projected deficit in fiscal year 2025 will be around $1.8 trillion, the difference between about $5.2 trillion in revenue and $7.0 trillion in expenses. Interest on the national debt this year will be around $950 billion, over twice the interest expense in the fiscal year 2021 budget. By 2035, the CBO expects the  yearly  budget deficit to increase to $2.7 trillion.   Interest expense this year passed budgeted outlays for the military. It is about equal to Medicare, and also to total non-defense discretionary spending.   Leaving aside Social Security and Medicare, interest expense is about 20% of total budget outlays. Interest expense is about half the budget deficit.   The $1.8 trillion budget deficit is 6-7% of total GDP, or approximately 10% of consumer spending. Adding the $1 trillion trade deficit, w...
Read more

Explaining Derivatives - An Analogy

Image
You go around to farmers with cows. You buy all the cows and pay the farmers a small fee to milk the cows and sell the milk. You pay for the cows with ass(et)-backed securities called MBSs (Milked Bovine Securities) that you tell investors are udderly safe. But some of the cows don't give enough milk (cow flow problem) or give no milk at all. You take some of the asset-backed securities, say they're backed by the subprime cows, and use them as collateral to sell another set of securities called CMOs (Cow Milk Obligations). Then you buy CDSs (Cow Dried-up Swaps) from AIG (Angus Insurance Company) to insure the CMOs when the cows stopped giving milk. If you work it right, you collect more on the CDSs than you pay out to retire the CMOs. The money you get from selling the dead cows go to pay the CLOs (cow leather obligations). You could also sell CDOs (cow dung obligations) that depend on how much cow dung is produced. This is a typical Wall Street product - turning sh...
Read more

Josiah Wedgwood, the Wedgwood Pottery Company, and the Beginning of the Industrial Revolution in England

Image
Wedgwood Anti-Slavery Cameo A better introduction to the beginning of the Industrial Revolution than Adam Smith is the history of Josiah Wedgwood and the Wedgwood Pottery Company. This is how one company actually ushered in the Industrial Revolution. The revolutionary generation that first adopted steam engines saw the following trends and changes: Manufacturing was being modernized by a small group of entrepreneurs. Much of the new raw material processing and manufacturing was concentrated in a small area in the middle of England, away from London. These modernizing entrepreneurs formed a new economic, intellectual and social network. Modernizing entrepreneurs like Wedgwood tended to be members of Dissenting sects (like Quakers) or Nonconformist churches (not members of the Church of England), Whigs (liberals) in politics, and believers in “progress.” They were optimistic about the future, influenced by the ideas of Hume, Rousseau, Locke and Adam Smith. They believed...
Read more

John von Neumann Sees the Future

Image
John von Neumann JOHN VON NEUMANN CREATES THE FUTURE If you want to understand the world we live in, you have to know about the thinking of three men – Alan Turing, Claude Shannon and John von Neumann.   I’ve talked a little about Alan Turing in an earlier essay.   All three men knew each other, discussed their ideas with each other, and promoted each other’s ideas. John von Neumann has been called the smartest individual of the 20 th Century.   Even an outline of his accomplishments, which you can read about in  Wikipedia, is hard to believe.   He invented game theory, which I discussed in two earlier posts.   He headed up a group of mathematicians who invented new statistical techniques at Los Alamos that made the atomic bomb possible.   In 1944, he wrote a memo that outlined the structure of the modern computer.   He then managed the design and building of a modern general computer and consulted on the building of virtually all...
Read more

The Roman Republic Commits Suicide: A Cautionary Tale for America

Image
Roman Legion Why Study Rome? Americans have focused on comparisons between Rome and America twice in American history.  The first time was during the period from before the Revolution to after the ratification of the Constitution and Bill of Rights, when the founding fathers and others looked to the Roman Republic for ideas and inspiration on how to structure the new government. After the American Revolution, the founding fathers, having read the Roman authors detailing the collapse of the Roman republic, worried about internal threats to the survival of their new republic.   The second time was when the United States became a superpower, especially after WWII, and then again after the collapse of the Soviet Union in 1991. Commentators compared America to the Roman Empire at the height of its power. There was some discussion about how America became a permanent warfare state and how it affected domestic democracy and civil society. ...
Read more

“Pax Americana”: The World That America Made

Image
There are two kinds of empires: the kind that rules through ruthless exploitation, and the kind that seeks to induce allies into defending themselves through economic incentives. (George Friedman) INTRODUCTION America's power and influence in the world rests on three broad, interrelated bases: 1) Overwhelming military power that can be projected anywhere in the world,   supplemented by security arrangements with allies and supporters. 2) A large, innovative, dynamic domestic economy as the basis for global economic and technological leadership. The economy provides the resources and technology to support the military and a global foreign policy. 3) Claims to moral and ideological leadership and influence, particularly the promotion of liberal democratic societies and supporting political institutions. This post will discuss the economic aspects and related security objectives of American foreign policy. It will focus on the structure of the global...
Read more