To understand in which direction it moves the economy of China, for some time now many analysts have been relying on unconventional indicators. This is seemingly unreliable data – such as the number of people using the subway or ticket sales in cinemas – but in some cases, if used properly, they can paint a more realistic picture than the official data.
The reason, he explains "The Economist,“, is related to the pandemic. Given the speed with which the Omicron variant spreads, many official data are already obsolete at the time of publication, because they refer to an outdated reality. The most recent statistics released by Beijing concern the months of January and February: they are surprisingly good figures, but already dated. For much of that period, in fact, new cases of Covid-19 in mainland China averaged fewer than 200 a day, while on April 4 the infections exceeded 13.
Examples of unconventional indicators in China
The Baidu index
Therefore, in order to have a more up-to-date and plausible picture of the Chinese economy, one must rely on indicators that are not very academic. The first example concerns Baidu, a very popular search engine in China which also offers a tracking app, through which it processes a daily mobility index of the population. From March 28 to April 3, this index was more than 48% lower than the level reached in the same period last year.
Metro journeys
The Baidu index is better suited to tracking movement between cities, said Ting Lu of Nomura Bank. To measure mobility within the same urban centre other indicators are therefore used, such as journeys on the subway. In the week ending April 2, the number of rides in eight major Chinese cities was nearly 34% lower than in the same period in 2021. In Shanghai, where many subway lines are closed, the number of rides fell by nearly 93%, a worse decline than that recorded at the beginning of 2020.
Couriers and trucks in China
Other unconventional indicators concern the distribution system of the economy, especially couriers and trucks. From March 26 to April 27, the express delivery index by couriers fell by nearly 12,8% year on year. Over the same period, a road freight index compiled by Wind shows a decline of 7%. The downturn looks particularly steep because this indicator was up more than XNUMX% at the end of last year.
Doubts about Beijing's official statistics
Unconventional indicators are particularly valuable in China also because there is no shortage of doubts about the reliability of the official data. The figures for January and February, for example, are not only old but also strange. They suggest that investment in assets such as infrastructure or manufacturing facilities grew by 12,2% in nominal terms year-on-year. But this trend is difficult to reconcile with double-digit declines in steel and cement production. The recovery in real estate investment is also surprising in the face of the decline in home and land sales.
The trap of weekly surveys
The timeliness of unconventional indicators makes them invaluable in times of change, but the data still needs to be interpreted carefully. “There are many pitfalls in these numbers,” Lu says. Very short-term surveys can be the object of distortions of all kinds, such as bad weather or holidays. Furthermore, many of these indicators have been calculated for no more than a couple of years: interpreting them is therefore more art than science.
An indicator is not enough
To avoid some of the pitfalls lurking in this data, Lu and his team of analysts look at “several numbers, not just one”. In a recent report they referred to 20 indicators, from the production of asphalt to the sale of cinema tickets: "If seven or eight indicators out of ten worsen, then we can be reasonably sure that GDP growth is slowing down," explains Lu , emphasizing that, right now, the direction is clear: "Something is going really wrong."
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