Better Data on New Economy; China’s Statistics

Gold Silver Reports — The new head of China’s statistics bureau last month visited a Beijing district that’s home to some of the biggest technology companies to deliver the message that his agency must improve tracking of the new economy “as soon as possible.”

Ning Jizhe said in a meeting with Beijing’s mayor and top Communist Party official that it’s challenging to accurately track new industries and business models, according to an article published by his agency, the National Bureau of Statistics. Officials haven’t created systematic ways to collect and classify data on the new economy, said Ning, a close adviser to Premier Li Keqiang who was named to the position in February.  

A report this week shows just what he’s up against in tracking a fast-changing economy while overhauling a bureaucracy of 20,000 people producing data economists have long questioned. The bureau’s own report faulted it for not keeping up with developments in the “new economy,” and cited wrongdoing by officials who improperly profited from agency data.

Getting an accurate read on new economic variables such as how much consumers spend on purchases from shopping websites like Taobao or online food delivery service is key to understanding the broader shift in the world’s second-largest economy. Services accounted for more than half of output last year for the first time ever, and the sector’s 7.6 percent growth helped offset slower expansions in manufacturing and agriculture in the first quarter.

Newer economic activities sometimes aren’t reflected in official data because they can’t be easily classified into existing categories, according to Ding Shuang, head of greater China economic research at Standard Chartered Plc in Hong Kong. New gauges of activity in the new economy will improve Beijing’s process for setting economic policy, he said.

“It will allow officials to more accurately assess economic performance with data from both outdated industries and new industries,” he said. “If the data look at traditional industries such as steel and coal more than new businesses, it would be likely to underestimate overall economic activity. Better assessments reflect a fuller picture.”
The NBS, which publishes China’s official economic data including gross domestic product, hasn’t kept up with developments in the new economy, according to a statement released Wednesday. To fix that, it will roll out new guidelines for compiling data across those sectors by the end of this year, and it has amended how it tallies regional growth.

The bureau also said officials improperly profited from agency data, according to the same statement, which was published by the Communist Party’s anti-corruption body. Inspections showed 313 employees violated agency rules and must return 3.23 million yuan ($500,000) in fees that they improperly collected, NBS said.

Before authorities can track the new economy, they first must define it. Activity may be divided into 11 categories, including e-commerce, Internet finance and startup incubators, the Xinjiang provincial government’s statistics bureau said in a statement on its website.

Premier Li, a Ph.D. economist, offered some clarity last month in his annual work report to the nation’s legislature. Small businesses can do a lot to develop the new economy, and new growth drivers will help with efforts to cut industrial overcapacity, Li said in his press conference at the closing of the National People’s Congress.

“The new economy covers a wide range of areas and has many dimensions,” Li said. “It’s not just about emerging forms of business and industries such as e-commerce, cloud computing, the Internet of things and Internet. It can also be found in smart manufacturing, large-scale customer-made production in the industrial sector.”

Shenzhen, the booming tech hub that neighbors Hong Kong, is the first city to test new ways of collecting data directly from new economy companies based there. The area is home to Tencent Holdings Ltd, operator of the ubiquitous WeChat social network app, and Huawei Technologies Co., the world’s third-biggest smartphone maker. The NBS has asked the Shenzhen statistics bureau to deliver the results of its pilot project by July.

Little changes can have a big effect: In December 2014, when China revised the size of the economy up by $308.8 billion, the gain was almost equal to the entire output of Malaysia. And it’s the newer economic drivers that are faring better as growth slows.

Better analysis may show the economy is bigger, not smaller, than official data suggest, according to a September report by Rhodium Group analysts and the Center for Strategic and International Studies. They concluded in a 200-plus page study that the services sector is the hardest to measure, while acknowledging that Chinese statistics are “sometimes shaped by political interests.”

Provincial growth totals that add up to more than the national GDP has long fueled skepticism by economists about the credibility of NBS data, but that may be changing. The combined nominal output of all 31 provinces in the first quarter was almost the same as the national GDP.

Reducing doubts about data has been a lingering challenge for China’s statistics chiefs. Ning’s predecessor, Wang Baoan in January asserted in his first press conference that the GDP data are “genuine and credible.” Days later, authorities said he would be removed over unspecified corruption allegations after less than a year on the job.

Ning took over in February and continues serving in his prior role as vice chairman of the National Development and Reform Commission, China’s top planning body.

Among the challenges he faces in tracking newer data sources are that they are from smaller businesses, some of which don’t pay taxes, Ye Qing, the deputy chief of the statistics bureau of Hubei province, said in an interview. He said current data collection methods miss some sectors, such as online retail sales.

“We’re working to amend this by collaborating with e-commerce conglomerates like Taobao,” he said. “But the missed part can’t be covered overnight.”  — Neal Bhai Reports

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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

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