Of course, China is slowing more than the data lead you to think18 May, 2012, 18:06. Posted by Zarathustra
Anyone who has the experience in working with Chinese economic data would be frustrated by the ways data are presented to us and the inconsistency among data. Not to mention that some of the data simply makes no sense to a point that we don’t quite understand why the National Bureau of Statistics and other government agencies are producing those garbage.
For instance, we never quite believe what the non-performing loans ratios in China as reported by the officials, while the GDP figures are always questioned to a point that we have to resort to something else like electricity output and consumption (and even that, we don’t know if they are reliable). Even the closely watched Chinese manufacturing PMI is showing a spectacular divergence with the actual industrial production to a point that one can declare that China’s official PMI is totally useless. And among the more usual complaints are the fact that inflation in China as experienced by people in everyday life seems to be invariably higher than the official numbers (but then, this happens everywhere isn’t it?). Not to mention that we don’t even have any reliable indicators of real estate prices freely available.
The problems with Chinese data have led us to resort to something else, stuff that we normally wouldn’t call “evidence”: walking around the cities and taking pictures, looking at anecdotal evidence, or talking to local people (which many of us would loathe). Observing windows without lights in the evening has been one of the tools that many and I have been using as an indication of vacancies in the real estate market (or in other words, over-building), and visiting empty properties, construction sites, or shopping malls are just other ways to know what is happening:
You may well end up producing something like this and being laughed at for 3 years before you look like you are right:
And fair enough: you cannot possibly visit all cities in China to count flats without lights and empty shopping malls. But the truth is that it is important to look beyond the data produced by the National Bureau of Statistics in order to get a better picture of the Chinese economy. And the clues I have been collecting is very clear: that the real estate bubble is very serious, and it is going to be very bad for the economy when it burst, and that is not what data alone can tell you.
Reuters has an excellent video following Nicholas Zhu of ANZ Bank walking around and taking pictures of some ridiculously large empty warehouses, huge metals inventory and many others, suggesting that the Chinese economy is slowing more than the data is suggesting (as if the data are not disastrous enough).