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Will Chinese official real GDP numbers be revised downward by at least 5% before 2023?

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The question of whether China's GDP figures are an understatement, accurate, or an overstatement crops up periodically. Some new notable cases have been made that Chinese GDP growth in recent years has been exaggerated. From March 7th 2019, see this Bloomberg article, and a similar take by the South China Morning Post. They cite this paper by the Brookings Institute, which describes an escalating discrepancy between provincially-reported numbers and nationally-reported numbers.

Separately, US economist Michael Pettis of Peking University says that Chinese gross domestic product is overestimated since "bad debt is not written down". That's another SCMP article, March 10th 2019.

Note that there have been papers and arguments to the contrary. For instance this paper arguing that it may be understated based on nighttime satellite luminosity measures. Later in that same year (2017) the exact opposite was argued in this paper (also using nighttime luminosity data); that China's growth has been exaggerated, and even that this finding generalizes to authoritarian regimes.

There was also that moment back in 2010 when Li Keqiang reportedly stated explicitly that "China’s GDP figures are man-made and therefore unreliable". Li Keqiang has since become the 7th Premier of the People's Republic of China and currently still in office as of this writing.

Thus, it is asked: will real (inflation-adjusted) Chinese GDP numbers be revised down by more than 5%, to undo the prior exaggeration?

For resolution, there are a couple of different scenarios to consider:

  1. Already-reported official figures in recent years being revised down by 5% or lower by the Chinese government. For example: 2018's end-of-year figure of $13.4 trillion USD having a newly-reported figure of $12.73 trillion USD or less. The reduction would naturally also apply to future real GDP figures (such as for 2019), but I think for the purposes of this question we will permit future exaggerations to their real GDP growth rate; a one-time reduction counts as positive resolution.

  2. Alternatively, if the Chinese government does not explicitly revise its past data for continuity and simply posts the (hopefully more accurate) new figure for 2019 under a separate method, then we would consider it positive resolution IF for instance the figure for 2019 real GDP failed to grow beyond 2018's (formerly-claimed) figure of $13.4 trillion USD. This is roughly similar to a revision to 2018 of 5% or more, as the official real GDP growth target for 2019 is 6% to 6.5%. In order to distinguish this event from a recession, we will look to official statements that would presumably be included to clarify the drop in real GDP. If for some weird reason this kind of official statement is not included, then we could use other indications to confirm if it's a recession (such as recessions happening elsewhere, or the Purchasing Manager's Index). There will likely be some sort of statement made about the revision if there is one so I don't think this will be ambiguous, but distinguishing the revision from a recession given no official statement is a weakly defined part of the question, so feel free to scrutinize.

For future inflation adjustments, we will be using 2018 as the price level base year.

This resolves negatively if neither 1 nor 2 happen before January 1st, 2023. Resolves positively if either of those two are deemed to have occurred. Resolution will be based on media reports by reputable financial institutions, by a report from the Chinese government, or by this Wikipedia page.

In order to immortalize the already-reported figures with which to make comparisons to future reported figures, I have download data from the World Bank and preserved the currently official figures in this spreadsheet.

Categories:
Economy

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