Read on Twitter
1/9
Very interesting thread. Capital Economics says China’s GDP growth has been overstated by roughly 12% in the past five years – a very hefty number – while the San Francisco Fed accepts the numbers in aggregate but says Beijing has been smoothing out the data. https://twitter.com/S_Rabinovitch/status/1316940464445149184
Very interesting thread. Capital Economics says China’s GDP growth has been overstated by roughly 12% in the past five years – a very hefty number – while the San Francisco Fed accepts the numbers in aggregate but says Beijing has been smoothing out the data. https://twitter.com/S_Rabinovitch/status/1316940464445149184
2/9
I don’t know enough to say whether either is true, but for me the biggest problem with China’s GDP growth data is that they do not have the same relationship to underlying economic growth that GDP growth data in other countries do, and so it is meaningless to compare...
I don’t know enough to say whether either is true, but for me the biggest problem with China’s GDP growth data is that they do not have the same relationship to underlying economic growth that GDP growth data in other countries do, and so it is meaningless to compare...
3/9
Chinese GDP growth with GDP growth elsewhere.
While GDP growth in most countries is a measured output that depends on volatile real economic activity, Chinese GDP is an input into the economic process in which local governments are required to add whatever additional...
Chinese GDP growth with GDP growth elsewhere.
While GDP growth in most countries is a measured output that depends on volatile real economic activity, Chinese GDP is an input into the economic process in which local governments are required to add whatever additional...
4/9
economic activity is needed to achieve the targeted GDP growth rate, whether or not this activity adds to welfare or productive capacity. Because they do not have to write down non-productive investment to nearly the same extent as in other countries (writing down bad...
economic activity is needed to achieve the targeted GDP growth rate, whether or not this activity adds to welfare or productive capacity. Because they do not have to write down non-productive investment to nearly the same extent as in other countries (writing down bad...
5/9
investment reduces the value-added component of that period’s GDP calculation), they are able to "achieve" any GDP growth rate they want – although this growth rate doesn’t necessarily represent real underlying growth in the productive capacity of the economy to nearly...
investment reduces the value-added component of that period’s GDP calculation), they are able to "achieve" any GDP growth rate they want – although this growth rate doesn’t necessarily represent real underlying growth in the productive capacity of the economy to nearly...
6/9
the same extent that it does in most other countries.
During the three decades when reported Chinese GDP growth represented "real" growth in the economy, and it was unnecessary to force local governments to maintain the target, not surprisingly GDP growth always...
the same extent that it does in most other countries.
During the three decades when reported Chinese GDP growth represented "real" growth in the economy, and it was unnecessary to force local governments to maintain the target, not surprisingly GDP growth always...
7/9
exceeded the target, and GDP growth rates were highly volatile. Once it no longer could do so, the best it could do was match the target, which it always did. https://carnegieendowment.org/chinafinancialmarkets/78138
exceeded the target, and GDP growth rates were highly volatile. Once it no longer could do so, the best it could do was match the target, which it always did. https://carnegieendowment.org/chinafinancialmarkets/78138
8/9
This of course explains much better why China’s GDP growth is so impossibly smooth than claims that China is somehow “cheating”, or purposefully smoothing out the data (why would they want to undermine their credibility by doing that?). Real economic activity is normally...
This of course explains much better why China’s GDP growth is so impossibly smooth than claims that China is somehow “cheating”, or purposefully smoothing out the data (why would they want to undermine their credibility by doing that?). Real economic activity is normally...
9/9
very volatile and reflects underlying conditions in the economy, while growth targets are determined politically. That's why input targets are always likely to be smoother than output.
very volatile and reflects underlying conditions in the economy, while growth targets are determined politically. That's why input targets are always likely to be smoother than output.
