BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 29/2015:
Is China fudging its figures? Evidence from trading partner data
John Fernald ()
, Eric Hsu ()
and Mark M. Spiegel ()
Abstract: How reliable are China’s GDP and other data? We address
this question by using trading partner exports to China as an independent
measure of its economic activity from 2000–2014. We find that the
information content of Chinese GDP improves markedly after 2008.We also
consider a number of plausible, non-GDP indicators of economic activity
that have been identified as alternative Chinese output measures. We find
that activity factors based on the first principal component of sets of
indicators are substantially more informative than GDP alone. The index
that best matches activity in-sample uses four indicators: electricity,
rail freight, an index of raw materials supply, and retail sales. Adding
GDP to this group only modestly improves in-sample performance. Moreover,
out of sample, a single activity factor without GDP proves the most
reliable measure of economic activity.
Keywords: China; GDP; principal components; structural break; forecasting; (follow links to similar papers)
JEL-Codes: C53; C82; E20; F17; (follow links to similar papers)
36 pages, October 15, 2015
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