Official Chinese statistics indicate 6.3% y/y growth in Q2. Maybe it’s less?

Fernald, Hsu, and Spiegel‘s China Cyclical Activity Tracker (CCAT) indicates slower growth than reported by GDP:

Figure 1: Official Chinese GDP growth, standardized and detrended (blue), CCAT (green), and Imports (tan), in standard deviation units. ECRI defined peak-to-trough recession dates shaded gray. Source: China CAT (August 2023 version), ECRI.

Note that the Q2 observation for CCAT is different from usual because the consumption series was available only through April.

The authors conclude:

Over the past four quarters ending in the second quarter of 2023, growth in cyclical Chinese economic activity was -0.51 standard deviations from trend.

To translate this into GDP growth, I regress y/y GDP growth on CCAT, constant and a trend, 2019-2023. The regression adjR2 is 0.96. This yields the following figure.

Figure 2: Year-on-Year Chinese GDP growth (blue), and fitted using China CAT (red). ECRI defined peak-to-trough recession dates shaded gray. Source: NBS, China CAT (August 2023), ECRI and author’s calculations.

The GDP growth rate consistent with Q2 CCAT is 5.3% instead of 6.3%.

Concerns about growth prospects were heightened by the release of July trade figures. Both exports and imports (in nominal USD terms) fell further than expected (respectively 14.5% vs 12.% Bloomberg consensus; and 12.4% vs 5.0% consensus).

Source: Reuters.

From Cash/Reuters:

The grim trade numbers reinforce expectations that economic activity could slow further in the third quarter, with construction, manufacturing and services activity, foreign direct investment and industrial profits all weakening.

Discussion of constraints on reporting on Chinese statistics and economic analysis, here.

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