Skip to main content

The Globe and Mail

Something is rotten in the state of Chinese economic data

ROB Insight is a premium commentary product offering rapid analysis of business and economic news, corporate strategy and policy, published throughout the business day. Visit the ROB Insight homepage for analysis available only to subscribers.

Is official economic data from China reliable? That's a very 2013 kind of question. It was an issue that lurked in the background during the pre-financial crisis years, but at the time, investors were content to count their profits from China-related resource investments and pray for the best. However, the skepticism has intensified over the past year. After parsing the numbers, Toshiya Tsugami, a former 2002 Senior Fellow at Japan's Research Institute of Economy, Trade and Industry, stated outright last week that recent data has reached fictional proportions.

The crux of Mr. Tsugami's argument is that Chinese government reports of total infrastructure investment are not supported by bank loan data. He notes the official estimate of 110 trillion yuan ($18-trillion) in infrastructure spending for the four years ending in 2012 is not believable when total bank loans account for only 67 trillion yuan, even in light of the recent boom in corporate bond issuance:

Story continues below advertisement

[Facts such as these] suggest that the actual amount of fixed-asset investments made last year was far smaller than the figure released by the government…. Even if it is true that the Chinese economy improved slightly in autumn last year, it is hard to believe the government's claim that the economy grew by 7.8 per cent in 2012.

Economists consider Chinese rail freight traffic and electricity generation as the two data points most immune from government manipulation. So, charting these against official gross domestic product has been the main method of assessing the veracity of official reports.

After completing this analysis in this chart, there are only two conclusions we can draw – either Mr. Tsugami is wrong, or the Chinese government has learned to fudge electrical power and rail freight statistics.

At this point the true state of the Chinese economy is almost like politics or the true value of gold, a matter of personal opinion with ample fodder for both bulls and bears. Admittedly, that's not the most helpful observation, particularly with so much of the domestic stock market dependent on China to determine commodity prices. But we're pretty much at the point where making bold predictions is irresponsible.

Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.

Report an error Licensing Options
About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at