Is China’s second quarter GDP as rosy as it seems?
- Some analysts have questioned China’s official second quarter growth rate of 3.2 per cent after the economy was pummeled by the coronavirus pandemic early in the year
- Many firms are still operating below capacity, and some smaller businesses are not open at all, which observers find hard to square with output results
While there are strong signs economic activity did recover from the 6.8 per cent contraction caused by the coronavirus shock in the first quarter, the latest figures from the National Bureau of Statistics and other government agencies have reignited long-standing debate about the accuracy of Beijing’s economic data.
Derek Scissors, a resident scholar at the American Enterprises Institute in Washington, wrote on Thursday there were inconsistencies between enterprise operation surveys and reported industrial production growth.
For instance, China’s statistics agency said about 67.4 per cent of industrial enterprises were back to 80 per cent of their normal production levels as of May 27, according to a survey. Scissors said the level of operation “clashed with output results”, as government data showed that industrial output fell only 1.3 per cent in the first half of the year, with output in June alone rising 4.8 per cent from a year ago.
It’s very difficult arithmetically to generate [year-on-year] growth when a chunk of firms have gone to zero activity
Scissors said the services sector had “the same issue”. China’s Ministry of Commerce said that 10 per cent of the country’s service businesses were still closed in late June, but China reported a 1.9 per cent expansion in service output for the second quarter from a year earlier.