Mittwoch, 15. April 2009

China's Economy

For a while, I've been trying to make sense of the recent disconnect between energy use and GDP growth in China.

According to latest data, March energy use was down 2 % yoy, after a 5.2 % decline in Jan/Feb. In total, that's -4 % for Q1.

At the same time, industrial output was supposed to be up 3.8 % yoy in Jan/Feb, and 8.3 % in March. And according to sources, total Q1 GDP grew 6.1 % yoy.

Apart from the statistical miracle of compiling GDP figures two weeks after the quarter is over, this just doesn't seem right: How do you get 6 % GDP growth using 4 % less electricity? And how do you increase industrial production 8.3 %, with electricity use down 2 %?

I know, in theory it's perfectly possible, if energy-intensive industries are hit hard. But we are told that just about every sector of the Chinese economy has grown, some more, some less. So my guess is: The economy is not in fact growing at 6 %, no matter what the official numbers say.

Oh, here's a graph showing electricity use: Quite a drop since Q3, eh? -17 % from Q3 to Q1, to be exact. Weren't they supposed to use less electricity during the Q3 Olympics?


  1. China's economic enigma

    Good post about the enigmatic Chinese numbers.

  2. Lies, damn lies, and statistics...

  3. Chinas electricity consumption is well down even if measured from the pre-olympic quarters Q2 or Q1. However, I assume the official GDP numbers are - eerr - optimistic estimations.

    The GDP growth of other export oriented economies is well down in negative territory. Germany (-2.1%, Q4/2008), Japan (-4,3%, Q4/2008), .... why should Chinas be well in plus?

  4. 'GDP is the total value of all final goods and services produced in a particular economy.'
    'GDP = C + I + G + (X − M).' G means 'Govement Spending'

    Maybe the GDP is really increased, though energy use is down, because: 1. Service industry got boommed (didn't study it)? 2.Govement Spending is vast (As far as I know, it could be the best explaination for the GDP growth. Province goverments spent huge amount for various projects, which weights near 30% of the economy and increasing-rate is also near 30%, contrarily manufacturing is cold).

    Anyway it just means Chinese GDP growth is only a result of figure game. I think it makes more sense if looking into green GDP?


  5. @Yvonne

    In principle, you are right: If the service industry grew, and the government also employed lots more bureaucrats sitting behind desks, whereas manufacturing declined, then GDP might well go up, while energy use goes down.

    Unfortunately, that interpretation doesn't square with the data: While tertiary industry did grow a little faster than GDP, mining, heavy industry and light industry all grew as well.

    As for provincial governments: It depends on what they are spending the money on. Infrastructure projects? That sounds energy-intensive. Bureaucrats behind desks? Less so.