Last updated: June 18, 2014 11:40 am
Review: Myth-Busting China’s Numbers by Matthew Crabbe
An informative primer on murky Chinese data that will light the path of the unwary
Even though it has a population of 1.36bn people and the world’s second-largest economy, China somehow manages to collect, collate and publish its quarterly gross domestic product figures in the space of just two weeks each quarter, then never revises them.
Then there is the strange and statistically impossible phenomenon of every single province in China posting annual growth rates that are higher than the national average.
Even Chinese Premier Li Keqiang has described the country’s economic statistics as “man-made” and suggested using less-manipulated proxies such as electricity demand, bank lending and freight volumes to estimate the true rate of growth.
Through anecdotes and examples he provides practical knowledge that would be invaluable for any international executive who has to make investment or operational decisions about their business in China.
One of the first and most important points he makes is that in China’s Leninist system all information is political and can be designated a “state secret” at any time if the ruling Communist party decides it does not help to bolster the party’s own legitimacy and power.
Crabbe also explains why data and statistics are so often manipulated by party cadres whose career advancement relies very heavily on them meeting various top-down targets issued by Beijing.
This book is timed very well – just as the crowd of self-proclaimed China hands based all around the world has begun to multiply exponentially.
The extremely important point he makes repeatedly is that it is impossible to understand what is happening in China by just looking at the data published by the government.
One of his best examples comes from an in-depth study he personally conducted in 2006 that concluded the actual size of the Chinese retail market at that time was roughly half the figure reported by Beijing.
This explained why so many multinationals were having such trouble at that time hitting the sales and revenue targets they had set for themselves in the country, based on official retail sales data.
With so much poor information and analysis on China proliferating around the world, Crabbe’s book provides a welcome warning to anyone trying to get a good idea of what is really going on in this continental-sized economy.
Given that he has run a consumer and retail consultancy focusing on the Chinese market since the 1990s, it is unsurprising that his best analysis and insights are related to these crucial sectors.
The book could have done with more rigorous editing in places, however, and has too many tables of data that add very little. Another small problem is that much of Crabbe’s evidence for his arguments comes explicitly from 2013, which guarantees the book is pretty much out of date even before it is published.
The danger of this is highlighted near the end when he asserts that Chinese property prices will probably continue to rise for a long time, even though prices are now falling across the country.
But, overall, this is a practical, useful book that should be required reading for all international executives, analysts and strategists whose business in some way relies on understanding what is going on in the world’s most populous country.
The reviewer is the FT’s Beijing bureau chief
Myth-Busting China’s Numbers: Understanding and using China’s statistics, by Matthew Crabbe, Palgrave Macmillan £14.99/$24
Copyright The Financial Times Limited 2014
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