With suspicious statistics, China obscures economy

China has acknowledged that its export-driven economy took a beating in 2008 and 2009, but Western analysts, most of whom are suspicious of Beijing's willingness to concede downturns, think China may have even slipped into a recession.

Because of political pressures and different methods of measuring, Chinese economic statistics can be notoriously suspect when compared with Western numbers. But the consensus among Western economists, including earlier skeptics, is that China has experienced an especially strong rebound since early 2009 from the global recession.

The Chinese government reported in late January that its economy expanded by 10.7 percent during 2009, measured on a fourth-quarter-over-fourth-quarter basis.

While official data point to a robust recovery, Chinese statistics may have masked a significant economic contraction at the height of the global financial crisis, according to analyses by Thomas G. Rawski, an economics professor at the University of Pittsburgh, and China specialist Gordon Chang.

"I agree with the trajectory and the timing of the recovery," Mr. Rawski said, "but the extent of the Chinese slowdown is far larger than suggested" by the official data.

Although China's economic figures do not reveal a definitive contraction during the global downturn, Mr. Rawski thinks China experienced an outright recession, when its gross domestic product (GDP) declined during one or more quarters.

"China is experiencing a classic V-shaped recovery," Mr. Rawski said. He thinks the downward portion of the "V" dipped into negative territory, probably during the first half of 2009.

One problem with China's method of economic measurement is politically motivated fudging of the numbers, but another is a different method of calculation.

Other major economic powers measure growth from one quarter to the next, meaning that a recession will show up in the form of negative growth figures. But because China measures growth by comparing a three-month period with the same quarter in the previous year, a recession in one or two quarters could be masked by intervening quarters of robust growth. As a result, "negative growth" rarely or never happens in China.

For example, that 10.7 percent figure from China's National Bureau of Statistics for the fourth quarter of 2009 was a year-over-year growth rate compared with the fourth quarter of 2008. Similarly, the 6.1 percent growth rate reported for the first quarter of 2009 was a year-over-year comparison with the January-to-March period of 2008. Likewise, the 7.9 percent growth rate for the second quarter of 2009 measures growth against the same quarter in 2008. The three growth rates - 10.7 percent, 7.9 percent and 6.1 percent - even if accurate, suggest a significant slowing of the economy in late 2008 and early 2009.

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