Every number is open to interpretation, while every sliver of data is part of an ever-changing economic jigsaw puzzle.
On Wednesday, China’s National Bureau of Statistics released a raft of figures capped off with GDP growth of 6.4% in the first quarter compared to a year earlier. The stats matched the last three months of 2018.
The world’s second-largest economy also saw an 8.5% jump in industrial production for March compared to the same period last year while retail sales increased by 8.7% with fixed asset investment rising 6.3%.
All the numbers beat economists’ expectations as Beijing started easing monetary policy by rolling out tax cuts across the board and pumping money into the cash-starved private sector through cheap loans.
“The national economy enjoyed a stable performance with growing positive factors, and stronger market expectation and confidence,” Mao Shengyong, a spokesman for the National Bureau of Statistics, said.
“Given slowing global growth and international trade, increasing international uncertainties and prominent domestic structural issues, the task of reform and development is arduous and downward pressure persists,” Mao added.
To turn around a cooling economy battered by the trade war with the United States, Beijing has injected a cocktail of financial steroids to boost business sentiment and consumer spending after relaxing President Xi Jinping’s ‘war on debt’ policy.
Up to 2 trillion yuan (US$298 billion) in tax cuts have been announced while infrastructure investment has also been ramped up with the Ministry of Finance increasing the special bond issuance quota for local governments to 2.15 trillion yuan ($320 billion).
Still, analysts and economists have for years questioned the authenticity of China’s economic data.
Christopher Balding, a former associate professor of business and economics at the HSBC Business School in Shenzhen and author of Sovereign Wealth Funds: The New Intersection of Money and Power, tweeted:
“What economy grows at 6.4% but see total business electricity consumption shrink by 1%?”
The veracity of NBS statistics was also questioned by Leland Miller, the CEO of the influential advisory company China Beige Book.
“The Chinese published GDP numbers are absolute garbage,” he said back in February. “It’s certainly the consensus that these numbers are unreliable.”
Taken at face value, Beijing has a delicate balancing act in trying to bolster business confidence without further inflating a provincial debt balloon, which grew to 18.39 trillion yuan ($2.74 trillion) by the end of last year, according to official data.
Off-balance-sheet borrowing could dwarf that figure. Last year, S&P Global, one of the “Big Three” credit rating agencies, published a damning report on the scale of the “credit risks” facing China.
“The extent of off-balance-sheet borrowing among local governments isn’t known, but it could be as high as 40 trillion renminbi ($5.78 trillion),” the study revealed. “That’s a debt iceberg with titanic credit risks.”
But for now, Xi’s administration is basking in the glow of a positive set of numbers.
“The better-than-expected [first quarter] figures reflect a strong March,” Julian Evans-Pritchard, the senior China economist at Capital Economics, said in a note.
“With credit growth now accelerating and sentiment improving, China’s economy will bottom out before long if it hasn’t already,” he added.
Prior to yesterday’s announcement, earlier figures showed that factory activity was raising, while unemployment was being kept in check along with inflation when you take into account seasonal adjustments.
Long-term, the government has predicted slower growth as domestic consumption replaces the old export-fueled model and high-tech manufacturing supersedes low-value mass production.
Official GDP growth for 2019 has been penciled in at between 6% to 6.5%, with March’s data at the top end of that spectrum.
“This confirms that China’s economic growth is bottoming out and this momentum is likely to continue going into months ahead,” Tai Hui, the chief market strategist for Asia-Pacific at investment firm JPMorgan Asset Management, told CNN.
After saying that, “momentum” like China’s economic jigsaw puzzle is all part of the numbers game.