Markets breathed a sigh of relief yesterday when China announced it was right on track for "growth around seven per cent," as predicted by the government at the beginning of 2015.
Growth in the giant economy's gross domestic product, a complex measure calculated by the central government's National Bureau of Statistics, was the lowest in 25 years, but it actually came slightly above estimates, boosting stock markets and commodity prices.
But a growing chorus of voices say official GDP estimates are unrealistic, and if that turns out to be the case, there may be more trouble ahead.
There have been doubts about China's official figures for years. So long as the country's giant economy continued to buy up and consume the world's resources, no one seemed to care.
That has now changed. Increasing signs point to a Chinese economy in trouble. Iron and copper imports have declined sharply, driving down world prices.
Its currency, the renminbi or Chinese yuan, has gone through gyrations. First, China's central bank sharply devalued the yuan, sending out an alarm that economic worries did not match public optimism. Not long after, China reversed course and began selling dollars and buying Chinese yuan as traders lost faith in the tumbling currency.
China's fledgling stock market has also been subject to repeated government meddling. That came after excessive government lending to the property sector had created ghost cities that had everything in them but people. All that interference has only added to a belief that Beijing was unwilling to trust market forces.
When it comes to calculating growth, the argument goes, why would China miss a chance to put a favourable gloss on the state of the economy?
Calculations by critics of the official figures are commonly in the three to five per cent range, but one China watcher, Gordon G. Chang, estimates the true number is lower still.
Lower than Canada's?
"Indicators for the year, however, point to a number in the low single digits, perhaps one per cent," writes Chang in a Forbes blog. At one per cent, China's GDP would be lower that Canada's current economic growth rate.
For China, the annoying thing about Chang's estimate is that he calculates it using a statement attributed to current Premier Li Keqiang, back when he was party secretary in Liaoning province.
According to diplomatic notes released by WikiLeaks, Li scoffed at the official figures, saying electricity consumption, rail cargo volume and loans dispersed were the only accurate ways of gauging economic growth.
"All other figures, especially GDP statistics, are 'for reference only,'" he said, smiling, according the notes on the meeting.
Chang's calculation of growth near one per cent is based on those three economic indicators that Li used to think were reliable.
Chang is not just some sort of anti-China crank. Partly due to the opaque nature of the government's calculations, others have expressed similar doubts in the past.
"It all seems too perfect to be true," began a critique of China's GDP in The Economist last summer, pointing out that the actual results in a previous release of data came out suspiciously close to government targets.
The magazine noted that earlier releases had been criticized on the grounds of various technical calculation methods, including the use of "GDP deflators." However, it concluded by cutting the Chinese government some slack, saying the growing service sector, including financial services, was more than just a bureaucratic figment.
'Traditional measures of the industrial economy, such as electricity and rail traffic, may become poor indicators of modern Chinese economic growth. - Don Pittis
No one will be surprised if China's official numbers have been massaged. Outright fakery will soon show up in further plunges in Chinese currency and imports. But there is another possibility.
The fact is, China's aim is to develop its domestic economy from smoke-stacks and construction to services and retail, with Chinese customers consuming an increasing share of the country's own output. As that happens, traditional measures of the industrial economy, such as electricity and rail traffic, may become poor indicators of modern Chinese economic growth.
If so, yesterday morning's surge in commodity prices might have been premature. Even if China begins to stimulate its weakening economy, the direction of that stimulation might not be in traditional areas.
Should it prove that Chinese GDP numbers aren't as far off as the critics claim, then those figures are also a reminder that in future, Canada cannot count on being a hewer of wood and drawer of water to China's industrial economy. Instead, we must increasingly learn to replace raw material exports with sophisticated service, intellectual, cultural and value-added products to sell to an enormous and growing Chinese middle class economy.
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More analysis by Don Pittis