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Some alternative ways to measure China's economy: Underwear or Pickles?

The Chinese government set its economic growth target for 2019 at 6.0 to 6.5 percent (Reuters)

China will release economic growth rates Wednesday for the first quarter of this year, figures that are always closely monitored by markets and interest rates -setters around the world.

The barometer of the world's second largest economy has also become an important goal in the Chinese and US trade war. President Donald Trump has repeatedly argued that China's slow economy means it needs a trade deal with Washington.

But in a country where products ranging from eggs and honey to luxury bags can be faked, many economists wonder how reliable the Chinese statistics are.

"Statistics are very political in China," says Jude Blanchette, head of China practice at Crumpton Group, a corporate information company, describing a constant effort to control information. "But how can a country be managed without access to good information?" he asked.

The Chinese government set its economic growth target for 201

9 at 6.0 to 6.5 percent, according to a report by Prime Minister Li Keqiang last month. The goals are a holdover from the central economic planning of the Mao Zedong period.

A target of 6.5 per cent had been set for 2018, and growth for the year came to 6.6 per cent. Although this was a pleasant surprise for many, it was still the slowest pace that China had recorded since 1990.

These are the numbers announced by China's National Bureau of Statistics, but many analysts believe they are skewed. After all, the data is collected by local authorities, which have an incentive to inflate their numbers because they are rewarded for meeting growth and investment goals.

"Since statistics are in conflict with each other many doubt the government's official figures," Xiang Songzuo, a former chief economist at the Agricultural Bank of China, told Japan's Nikkei in an interview published last month.

It apparently includes the central bank. People's Bank of China has its own set of growth statistics that it uses to make economic decisions.

Experts at the Brookings Institution reviewed the figures and made their own calculations. In a study published last month, they estimate that China's GDP growth between 2008 and 2016 was 1.7 percentage points lower than the official statistics suggested. If so, China's true growth last year would have been below 5 percent. Many economists believe that the growth rate is actually about 3 or 4 percent, while a handful even thinks it's negative.

But in China, GDP is so politically sensitive that it is unthinkable to recognize such figures.

Here are some alternative ways to measure China's economy.

Li Keqiang Index

This is the most talked about alternative way of economic growth in China. Prior to becoming China's prizes, Li was the Communist Party Secretary in the northern province of Liaoning. Later, he suggested that China's GDP data was "man-made" and told the US ambassador to China at that time, Clark T. Randt Jr., that he preferred to use other indicators to get a picture of the economy. The Ambassador's account of their conversation was contained in one of the diplomatic cables published by WikiLeaks.

Li said he looks at three figures: power consumption; The volume of rail freight, as he said, was quite accurate because taxes are charged for each weight unit; And the amount of loan paid, as he said, also used to be accurate, given the interest burden.

"By looking at these three numbers, Li said he can measure with relative accuracy the speed of economic growth. All other numbers, especially GDP statistics, are only reference, he said smiling, the ambassador wrote back to Washington. [19659003] The Economist magazine continued to create a "Keqiang index" for China's economy.

The Excavator Index

Some economists have developed an "excavator index", suggesting that heavy sales of machines are an indicator of infrastructure investment.

Highway, bridge, construction and other engineering projects rely on excavator earthworks, thus the excavator's marketing volume has become the microscopic window that observes fixed assets, the state-run People's Daily reported in 2017

There was a strong correlation between the "excavator index" and the infrastructure construction Zhou Qingjie, professor of economics at Beijing Technology and Business U niversity told the newspaper.

Excavator sales reached 11,283 in May 2017, an increase of 105.65 percent from the previous year, the paper reported.

But the index turned out to have a little desire. The overall economy grew only 6.9 per cent in 2017 from the year before.

The Underwear Index

The economy of the northeastern province of Liaoning goes well, the JD Big Data Research Institute, part of one of China's largest online shopping sites, reported in December.

How did it know? Because the sale of men's underwear has risen for three consecutive years. Sales of men's underwear throughout the province rose 42 percent in 2017 during the previous year, increasing by 32 percent in 2018.

The index was a twist on the famous barometer put forward by former Federal Reserve Chairman Alan Greenspan As declining sales of men's underwear indicated a deteriorating state of the economy, and vice versa.

This index may have contained some truth. The province's economy picked up markedly in 2018. "The recovery is mainly due to the fact that coal and steel prices increased during the period," said Liang Qidong, vice president of the Liaoning Social Sciences Academy. "The recovery can also be seen in the volume of rail and freight freight, industry power consumption, the scale of business and employment," he said according to a Global Times report on the index.

The Instant Noodle Index

Some economists have said that instant noodle sales can be a useful indicator of a country's overall economic situation. In good times, people spend money on better food. But in many economically difficult times, they tend to buy cheap food like potty noodles instead of restaurant food.

In the first half of 2018, China's two largest instant noodle companies – Master Kong and Taiwan-based Uni-President Enterprises Corporation – reported that annual sales grew by 8.5 percent and 6 percent, according to Sixth Tone, an online publication. Meanwhile, the food supply grew with the slower frequency, as this became a trend, with a relatively low 18.4 percent.

The Pickle Index

To track migration in China, a government officially monitored the sale of a large radical-like vegetable, or zhacai, from Fuling, a district in Chongqing.

The pickled vegetable is a staple color of migrant workers, and consumption figures helped scientists track workers' movement in China, a planning officer at the National Development and Reform Commission (NDRC) told the economic observer in 2013.

Migrant workers move from their home provinces in rural, central areas at economic hubs in China's south and east.

Decline in vegetable sales seemed to support signs that the economy was slowing down in 2013, said the South China Morning Post official.

The proportion of pickled sales of vegetables in southern China fell from 49 per cent in 2007 to 30 per cent in n 2011, while the proportion of sales in the interior increased steadily as immigrants returned home. Chongqing Fuling zhacai saw revenue from inland provinces increase by about 50 percent between 2011 and 2012, the paper reported at that time.

(Apart from the headline, this story has not been edited by NDTV employees and is published from a syndicated feed.)

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