Having already exposed the fakeness of China's most recent trade data (and implicitly its GDP data), we were not entirely stunned by the fact that, as Bloomberg's Tom Orlik reports, China’s growth rates for quarter-on-quarter and year-on-year GDP for the past year don’t match.
So to start with, we have this entirely unsustainable "data"...
That, combined with confirmation that 1Q output was underpinned by an unsustainable resurgence in real estate, tarnishes the newly acquired shine on the country’s economic prospects.
And now, as Bloomberg's Tom Orlik and Fielding Chan expose...
The initial reaction to the 1Q GDP data, published Friday, was a sigh of relief. Growth at 6.7% year on year was in line with expectations and comfortably inside the government’s 6.5-7% target range. If anyone noticed that the normal quarter-on-quarter data was missing from the National Bureau of Statistics release, few thought anything of it.
YoY Versus Accumulated Annual QoQ GDP Growth
h/t @S1moncox
Then, on Saturday, the quarter-on-quarter data was published, and some of the relief turned to consternation. Quarter-on-quarter growth in 1Q was just 1.1% -- an annualized growth rate of 4.5%, and the lowest print since the data series became available in 2011. Worse, based on the accumulated quarter-on-quarter data over the last year, annual growth in 1Q was just 6.3% -- substantially below the NBS’s 6.7% reading for year-on-year growth.
Explaining the inconsistency between the two data points is tough to do. Accumulated quarter-on-quarter growth over four quarters should add up to year-on-year growth. In the past, it has. The divergence in the 1Q readings might reflect something as simple as difficulties with seasonal adjustment. Even so, against a backdrop of concerns about data reliability, it can only add to skepticism about China’s true growth rate.
As The Economist's Simon Cox sums up:
China's Q1 growth was either 6.7% y/y, 4.5% q/q saar (1.011^4) or 6.3% y/y (1.018*1.018*1.015*1.011)
But then again - in the infamous words of Hillary Clinton - what difference does it make? Now that manipulation is so exposed and unhidden, why worry?