China's National Bureau of Statistics is scheduled to report second-quarter gross domestic product growth on Friday, and according to a Dow Jones poll of 15 economists, it is likely to show the country's economy grew by 7.6% from a year earlier. That is down from 8.1% growth in the first quarter, and the slowest pace since the first quarter of 2009.
Coming hard on the heels of a weak jobs report in the U.S in June, and fading business sentiment in European economic powerhouse Germany, fresh evidence of slowing growth in the world's second-largest economy would be a further blow to an already fragile global recovery. If, as some economists suspect, growth is even slower than the official data suggest, that would compound fears that China is poorly placed to help lift the world economy out of its slump.
Economists who doubt the reliability of China's official gross domestic product figures are using other methods to measure China's growth and finding mixed results, reports the WSJ's Aaron Back.
Economists have responded to long-standing doubts about the reliability of official data by constructing their own indexes of China's growth. Typically these are based on measures such as electricity production, rail freight and real-estate construction that should track growth closely but are regarded as less prone to political interference.
London-based research firm Capital Economics created its own index during the last major downturn during the 2008-09 crisis. "We created a proxy of Chinese economic activity in order to answer doubts about the data, somewhat to our surprise it generally runs in proximity to the official numbers," said Mark Williams, an economist at the firm. "But particularly at the beginning of this year they began to diverge. So doubts about the quality of the data are justified."
Capital Economics's proxy indicator suggests that China's economy grew by around 7.6% in the first quarter of this year, half a percentage point lower than the official GDP figure.
Similar results reached by other analysts have led some to suspect that the data are "smoothed" and become less reliable during periods of rapid slowdown or strong growth—times when the margin for error in calculating the true rate of growth also may be higher.
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