For the third consecutive quarter, China has managed to maintain exactly 6.7% growth, causing economists to somehow raise their eyebrows even higher when viewing notoriously shaky Chinese GDP data.
Predicting China’s official annual GDP growth has always been a piece of cake for experts — or for anybody really. In the past five years, the yearly growth numbers have either met expectations or managed to only exceed them by 0.1%. Leading many to look at China’s primary economic indicator with more than a tad of skepticism. But economists say that this year, China has really managed to outdo itself.
“It’s quite implausible that growth would be 6.7% for three straight quarters,” Julian Evans-Pritchard, an economist with Capital Economics Pte., told The Wall Street Journal. “They’re obviously smoothing the data quite a bit. Even by Chinese standards, this is a new level of stability.”
Of course, stability has always been what matters most to the Chinese government. After achieving years of over sky-high growth, China appears to have finally fallen victim to the Law of Large Numbers and leaders seem to be doing what they can to soften the fall.
Experts believe that Beijing sets its target — 6.5% to 7% this year — and then creatively massages the economy and data to achieve that target, even if it means resorting to some clever accounting or potentially dangerous stimulus sprees. The International Monetary Fund recommends that China change its course, as the country is racking up unsustainable amounts of debt compared to GDP.
So, just what is the “real” number? Well, nobody really knows. Economists estimate that the numbers may only be skewed one or two tenths of a percentage point. According to The Wall Street Journal, some say that in the third quarter, Chinese growth may well have exceeded 6.7%, while it likely fell short of that number in the first quarter of the year. Either way, it’s useful to look at the nominal rate of growth.
— Tom Rafferty (@rafferty_tom) October 19, 2016
So, any bets on what that fourth quarter growth number will be?