Last week Chinese economists released their quarterly growth statistics for Q-3. The 6.9% overall growth was the nation’s slowest expansion since the financial crisis of 2009. While Chinese premier Li Keqiang did not comment on the economy missing the forecasted 7%, the weakening of steel consumption and energy use during the quarter indicate the a weakening of heavy industry and manufacturing, two of the primary drivers of the country’s growth. Most mainstream news sources in the United States published the Chinese national growth data; however, there is often scrutiny of the data the country releases.
The China Beige Book, directed by the leadership of Washington and Lee University alum Leland Miller, is the world’s leading data analytics firm focused specifically on the Chinese marketplace (chinabeigebook.com). “Founded in 2010, China Beige Book International operates its own independent in-country private data network, led by hundreds of on-the-ground researchers that provide real-time economic data and customized survey work for both corporate and financial sector clientele, as well as over a dozen of the world’s largest central banks” (chinabeigebook.com). China Beige book finds its business in a market niche of skeptical investors. It is not uncommon to find articles citing the inaccuracy of the economic data the Chinese government releases. Over the past twelve months China’s central government has cut interest rates six times, and during the collapse of the country’s stock market in June 2015 the Chinese government worked to correct the market by “pumped billions of dollars by buying stocks directly or though various government controlled entities, banning IPOs and secondaries to limit supply of new stock, banning short-selling” (forbes.com).
Chinese author Gordon Chang expressed significant skepticism of the 6.9% economic growth released by the country in Q3. Chang “contends that official economic data does not give a picture of 7 percent growth, pointing to indicators including rail freight (down 10.1 percent in the first two quarters), trade volume (down 6.9 percent), construction starts by area (down 15.8 percent), and electricity (up by just 1.3 percent)” (thediplomat.com). Yukon Huang, senior associate at the Carnegie Endowment’s Asia Program, similarly stated his doubts on the economy’s growth data, citing that “half of GDP is growth determined by investment, half by consumption” (thediplomat.com).
Leland Miller and the China Beige Book team pursue the goal of providing accurate economic data to the global marketplace, using “country-wide, independently-collected data on real-time growth, employment, wage, and inflation and a uniquely granular window into the country’s historically opaque credit environment” (chinabeigebook.com). The publication of this accurate data can help investors make more informed financial decisions when undertaking foreign investments or are analyzing the equities market, which is proven to have significant ties to Chinese business growth. The interpretation of accurate statistics will be important for analysis of the twenty first century’s greatest growth story.