China's struggle to measure economy clouds outlook
Associated Press
Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Updated 4:06 am, Tuesday, April 16, 2013
The market plunge highlighted complaints about the possible inaccuracy of Beijing's official data and the intense, possibly excessive importance traders attach to a handful of Chinese economic indicators. What matters more than a difference of a few tenths of a percentage point in growth from quarter to quarter is whether Chinese leaders are allowing the private sector to flourish by reducing the role of state industry in the economy, said Ben Simpfendorfer, managing director of Silk Road Associates, a consulting firm in Hong Kong. China is watched especially closely because it is a major market for foreign goods from iron ore to smartphones and is relatively healthy, fueling hopes Chinese demand can help offset weakness in the U.S., Europe and Japan. Confusion about how fast China is growing can hamper foreign and private companies in industries from construction to chemicals to consumer goods as they make plans for business and investment. Chinese companies have an incentive to avoid taxes or boost export rebates by misreporting sales and profits. Government figures on home sales also might give a false picture of the strength of the housing market because they rely on seller-reported prices without independent measurement. The World Bank and other advisers have warned that to keep growth strong, Beijing needs to curb the dominance of state industry and encourage free-market competition — a factor that isn't reflected in the headline numbers. Reported by SeattlePI.com 7 hours ago.
Associated Press
Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Updated 4:06 am, Tuesday, April 16, 2013
The market plunge highlighted complaints about the possible inaccuracy of Beijing's official data and the intense, possibly excessive importance traders attach to a handful of Chinese economic indicators. What matters more than a difference of a few tenths of a percentage point in growth from quarter to quarter is whether Chinese leaders are allowing the private sector to flourish by reducing the role of state industry in the economy, said Ben Simpfendorfer, managing director of Silk Road Associates, a consulting firm in Hong Kong. China is watched especially closely because it is a major market for foreign goods from iron ore to smartphones and is relatively healthy, fueling hopes Chinese demand can help offset weakness in the U.S., Europe and Japan. Confusion about how fast China is growing can hamper foreign and private companies in industries from construction to chemicals to consumer goods as they make plans for business and investment. Chinese companies have an incentive to avoid taxes or boost export rebates by misreporting sales and profits. Government figures on home sales also might give a false picture of the strength of the housing market because they rely on seller-reported prices without independent measurement. The World Bank and other advisers have warned that to keep growth strong, Beijing needs to curb the dominance of state industry and encourage free-market competition — a factor that isn't reflected in the headline numbers. Reported by SeattlePI.com 7 hours ago.