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China Commentary
Tracking Military, Geopolitical & Strategic trends to determine China's impact Regionally Globally and Domestically
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The Curious Case of China’s GDP Figures

The Curious Case of China’s GDP Figures | China Commentary | Scoop.it

Early this year, China found a missing province, one doing very well for itself.  The total GDP for 2012, according to the National Bureau of Statistics, was 51.9 trillion yuan.  The total GDP figures of China’s 31 provinces for 2012 added up to 57.6 trillion yuan, giving the phantom 32nd province an annual GDP of 5.7 trillion yuan.  For many economists, this was just a shining example of what they have believed for years: that China’s GDP numbers are questionable at best, and often exaggerate China’s growth, largely for political reasons.  


In fact, in 2007, Li Keqiang, then-party secretary of Liaoning and now soon-to-be premier, said that GDP statistics were “for reference only” and “man-made,” and that for his purposes, he preferred to look at electricity consumption, rail cargo volume, and loan disbursements.  He did not say this publically–rather, his statements (reflecting what many officials surely believe) came to light in 2010 in a U.S. government cable released by Wikileaks.

DOSID's insight:

There are a number of reasons for doubts about the accuracy of China’s GDP.  To begin, there are structural political disincentives to reporting accurate GDP figures at the local level.  Local officials are promoted almost entirely on the basis of their locality’s growth rates, giving them a huge incentive to report increasing GDP figures, no matter if they are or not. Environmental concerns have also created an incentive for officials to lie: higher growth rates, when paired with the amount of coal burned, give the province an appearance of greater energy efficiency.

 

At the central level, it is politically imperative that GDP continues to rise, primarily because the central government has erected a system on the promise of economic success, and fears instability should growth decline and unemployment rise.  At this point in time, with a leadership transition in process, it is particularly crucial that growth continue. 

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Graham Watson's curator insight, March 8, 2013 7:47 AM

Very interesting piece this from China commentary; lots of evaluative angles to take about the nature of official data. Why do commentators look at electricity consumption rather more carefully in China than they do in other leading economies?

 

Can you think?

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China Shipbuilders Chart New Course: Offshore Energy Vessels

China Shipbuilders Chart New Course: Offshore Energy Vessels | China Commentary | Scoop.it

Amid a serious drought in orders for their mainstay cargo ships, leading Chinese shipbuilders are under growing pressure to win more contracts for vessels used in offshore oil and gas exploration.

Relative newcomers, the Chinese face formidable competition from South Korean and Singaporean shipbuilders that are more experienced in building specialized ships. But with strong government backing and a willingness to offer low- or no-margin deals, China could one day hold a strong position in offshore energy vessels in much the same way it won a significant chunk of the market for conventional ships.

 

“China needs to diversify its shipbuilding product mix away from its dependence on dry bulk vessels,” Barclays analyst Jon Windham wrote in a recent research note. “In our view, 2013 is the year in which Chinese policymakers will be forced to address the collapsing backlog in the industry.”

 

Mr. Windham said the central government can support the transition to offshore by urging China’s policy banks—lenders such as China Development Bank that make funds available to help Beijing advance its policy goals—to offer generous loan terms including low down payments to potential buyers.

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The Twenty Largest Chinese Companies, 2012

The Twenty Largest Chinese Companies, 2012 | China Commentary | Scoop.it
DOSID's insight:

Some thoughts and observations:

They are all mainland China companies, with the exception of Noble Group, which is a “natural resources supply chain manager” based in Hong Kong (though incorporated in Bermuda).They are all, again with the exception of Nobel Group, state-owned enterprises or majority (over 50%) state owned.Cumulatively, their turnover is $2.25 trillion. This is over a quarter of total GDP ($8.25 trillion, nominal).Fifteen of the twenty are headquartered in Beijing. The exceptions are: Noble, SAIC, Dongfeng, China Southern and China FAW. These veer to the bottom end of the turnover scale.ICBC makes over 3x the profits of Sinopec.Sinopec, China National Petroleum and state Grid are #5, #6, and #7 in the Global 500 Rankings. The rest range from #54 to #169.If you look at the Global 500, ICBC has only marginally higher revenues ($109bn vs $108 bn) but substantially higher profits (23% higher) than Apple ($32bn vs $25 bn).Oil is very very important.The turnover of Sinopec is larger than the GDP (nominal) of Thailand, or Denmark._______________________________________________

Here is the full list of enterprises and turnover ($bn):

Sinopec ($375)China National Petroleum ($352)State Grid ($259)ICBC ($109)China Construction Bank ($90)China Mobile ($88)Agri Bank ($85)Noble Group ($81)Bank of China ($80)China State Construction Engineering ($76)CNOOC ($76)China Railway Construction ($71)China Railway Group ($71)Sinochem ($71)China Life Insurance ($67)SAIC Motor ($67)Dongfeng Motor ($63)China Southern Power Grid ($61)China FAW ($57)China MinMetals ($55)
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China’s Economy: The Coming Year

China’s Economy: The Coming Year | China Commentary | Scoop.it
What’s the outlook for China’s growth in 2013? China Real Time asked economists to flip their best forecasting coin, then charted the results.

 

The starting point for analysis is that – even when its economy is firing on all cylinders – China doesn’t have its old capacity to grow.

 

“At the moment unemployment is not serious, and inflation isn’t high, which suggests that the current 7.5% growth rate isn’t far from the potential growth rate,” wrote CICC economist Peng Wensheng. That’s a marked deterioration from an average of about 10% annual growth in the last decade.

 

Even as potential growth declines, economists are hopeful that 2013 will be slightly better than 2012. The median forecast of 19 private sector, think tank and international organization economists polled by China Real Time is that gross domestic product will expand 8% in the year ahead, an improvement on 7.7% in the first three quarters of 2012.

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