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Jane Cai

The true depth of the economic slowdown on the mainland has come under the spotlight following a report in the New York Times claiming that China had falsified data to understate the severity of the downturn.
Economists at major investment banks said the June 22 report generated a flood of questions from concerned investors last week.
The accuracy of mainland statistics has long been questioned; but the latest allegations added fresh fuel to those concerns, and stirred up anxiety among investors already skittish  about the gloomy outlook for the global economy. 
China-related indices in Hong Kong and mainland bourses lost ground early last week before investment bank economists rallied to dismiss the claims and confidently forecast that slump in the world's second-largest economy would bottom out from the third quarter. 
The New York Times article cited unnamed 'prominent corporate executives' in China, and a Western economist 'with ties to the National Bureau of Statistics' as saying that local officials were falsifying data on power consumption to 'disguise the true depth of the troubles'.
Bank of America-Merrill Lynch China economist Lu Ting  said many clients had called to ask for his views on the article. 
'It's true that the slowdown in China is greater than we had expected, and it's also true we have complained about the quality of China's data,' Lu said.
'But we have some very different views from what the article claims.' 
While the economist conceded that some local mainland officials might be motivated to over-report some macro indicators such as GDP and fixed asset investment, Lu said they would have little incentive to over-report energy use because Beijing imposed increasingly restrictive rules on energy use per unit of GDP on the local authorities.
The official power data, an industrial thermometer, showed growth in electricity consumption picked up to 5.2 per cent year-on-year in May from 3.7 per cent in April. 
JPMorgan Chase economist Zhu Haibin  said he received similar client inquiries. 
'Overall, we think the claim is unfounded. The power production number is difficult to falsify given the high concentration in the market and that big companies report the data directly to the central government via an automated computing system,' Zhu said. 
Barclays Capital economist Huang Yiping  said the brokerage's economists recently visited Beijing and talked to various government officials, partly because of the 'renewed perception that the real economy is much weaker than suggested by official statistics'. 
'It is possible that the official statistics overstate economic activity, particularly during an economic downturn. But there is evidence - including 'green shoots' in infrastructure spending - pointing to a recovery ahead,' Huang said. 
He said the official data tended to smooth out fluctuations in growth - underestimating growth when the economy was booming but overestimating it when the economy was weak. 
It was therefore possible that actual GDP growth in the first quarter might be below the officially reported 8.1 per cent, he said - 'but it would be wrong to use a selected set of weak economic data to infer overall economic conditions'. 
Economists widely believe the government's policies to support growth have already had an impact because May data have generally shown an improvement from April. 
'The bottom line is that China should have no problem managing a 7-8 per cent GDP growth this year,' Huang said. 
'But investors will likely be disappointed if they expect China to rescue the world if there is a deep recession in Europe.'
Even a recession in Europe might not trigger a repeat of the 2008 stimulus package on the mainland, he said. 
The mainland economy grew an official 8.1 per cent year-on-year in the first quarter. 
April data weakened further before May data gave some signs of improvement. Many economists now say the economy should have bottomed in the second quarter.
4.6% 
The year-on-year increase in industrial electricity consumption on the mainland in the first five months



Mixed picture on accuracy of China's economic data