Questions have been raised about the reliability of official Chinese GDP figures after third-quarter growth beat expectations, despite slipping to a six-year low.
Beijing said that the economy had grown by 6.9 per cent in the three months to September, better than forecasts for 6.8 per cent but below the government’s 7 per cent target for the first time since early 2009.
Economists immediately queried the numbers, claiming that they needed to be taken with “a grain of salt” and were “suspiciously close to the target”. A widely followed alternative index suggested that China may be expanding at only half the official rate, they said.
China’s slowing economy has provoked “meltdown” warnings and sparked fears that the country could yet derail the global recovery. Fuelling those concerns, the official measure of nominal growth in the third quarter fell to a 16-year low of 6.2 per cent, once inflation effects were stripped out. Unusually, the nominal rate was below the real rate because the statistics office decided that the economy was in deflation.
The weak data are an unwelcome backdrop for President Xi’s visit to Britain, the first by a Chinese head of state in a decade. He will be staying at Buckingham Palace and is expected to confirm China’s investment in the UK’s nuclear energy programme during the trip.
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Before leaving for Britain, Mr Xi said: “As an economy closely linked to international markets, China cannot stay immune to the lacklustre performance of the global economy. We do have concerns about the Chinese economy and we are working hard to address them.”
Chinese stocks rose modestly after the GDP announcement, which allayed fears of a hard landing, even if they failed to silence critics.
Economists pointed to the Li Keqiang index, which measures electricity consumption, bank lending and rail cargo and is named after the Chinese premier, who devised it when he was a regional governor. The index suggested growth was “3 per cent to 4 per cent”, Russ Mould, investment director at AJ Bell, the stockbroker, said.
Despite suspicions about the data, the third-quarter numbers suggested that the economy was transforming as planned from investment-led growth to one driven by household consumption and services. Industrial production slowed to 5.7 per cent for the month of September, while retail sales jumped by 10.9 per cent.
Sheng Laiyun, a spokesman for China’s statistics agency, said that the third-quarter figures marked only a “slight slowdown”, after 7 per cent growth in the first half, and argued that the Chinese economy was still within its “proper range . . . China does not lack growth momentum. Industrial sector growth is slowing, but services sector development is speeding up.”
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Mr Mould said he was “sceptical” that the economy could be “transitioning away so quickly from manufacturing”, while Julian Evans-Pritchard, China economist at Capital Economics, added: “These figures need to be taken with a grain of salt, as official GDP growth appears to have become a poor gauge of the performance of China’s economy.”