The Goat and Perception of China’s Economy

Published on Author heardd16

China’s most recent economic data clearly suggests slowing economic growth, with inflation increasing just 0.8%, and decreases in both imports and exports. These metrics however are distorted by an astronomical [pu intended?] disparity between the Chinese and Gregorian calendar systems. China celebrated the advent of the Year of the Goat on February 19, 2015, well over a month after the western New Year. While the Chinese New Year always comes after our December 31, China’s lunar-solar mixed calendar system recognized a leap month this new year, pushing back their New Year a whole month. Thus, comparisons between the economy now and the same time last year should account for this leap month.golden-new-year-goat-2015

Peaks in domestic investment tend to occur shortly before New Year’s eve in China, thus the scramble to finish projects took place a good deal later than it had the previous year. As a result, “January appeared unusually sluggish when compared with the previous year” (Economist 40). Historical trends of Chinese consumer price changes in years with a leap month show that inflation loses about 0.5% in January. This is not to say that without the leap month, China would have experienced much more than the 7.4% economic growth reported on the year 2014. The Economist article concludes, “To get a better reading on [economic growth], the government knows that it will have to wait for one more cycle of the moon.” Besides, whatever the the impact of this leap year on China’s economic growth, it is still “crocodile tears” (as we say in class) for China, since they still have a break-neck increase in GDP relative to world GDP growth.

One Response to The Goat and Perception of China’s Economy

  1. See my recent post on my Autos and Economics blog on correcting for seasonality. Given the poor quality of much Chinese data, and the rapidity of structural change, using past patterns to correct current data will make only a modest improvement in the ability to “read the tea leaves” on where the economy is headed. When seasonal patterns are both very large and irregular from year to year in timing and magnitude — the gist of the post above — well, not much can be done to correct for seasonality.