China said this week that its economy grew 7 percent in the second quarter, but economists who believe the country is fiddling with numbers to quell concerns of a slowdown, feel the growth was likely lower.
The country is aiming for a 7 percent growth rate for the year, though that percentage would mark China’s weakest expansion in 25 years.
In its latest economists survey, the Wall Street Journal found that more than 96 percent of respondents said China’s gross domestic product (GDP) estimates aren’t accurate reflections.
“Official data are manufactured to fit the government’s narrative,” Stephen Stanley, chief economist at Amherst Pierpont Securities, told the Journal.
China’s National Bureau of Statistics said Monday it had revised the country’s 2014 economic growth rate to 7.3%, down from the previously released figure of 7.4%, which analysts say could be a way to ward off still slower growth this year by making financial services factor less in measuring economic expansion. The bureau also revised down growth rates for the first two quarters of 2012.
Monday’s news, coupled with last month’s yuan devaluation, a purchasing manager’s index of 47.1 (a sub-50 figure indicates contraction) and exports down 8 percent year-on-year, and it’s little wonder China’s news stoked fears of a downturn.
The country’s National Development and Reform Commission (NDRC) also said Monday, though, that the effects of some of its moves, including interest rate cuts and market stimulus should shore up economic growth in the coming months.
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Despite China’s market fluctuations, NDRC said real estate prices, turnover and power usage—indications of a stabilizing economy—all improved in August.
“The economy is expected to maintain steady growth and we are able to achieve annual economic growth target,” the Commission noted.
None of the economists in the Wall Street Journal survey, however, thought China’s GDP was expanding 7 percent or more. More than half pegged the annual growth this year closer to the 5 to 7 percent range and about one-third estimated the country’s growth for the year would be between 3 and 5 percent.
Half of the economists surveyed in the study said China’s moves would only be a “mild drag” on the American economy and more than one-third said despite the market fluctuations, the domestic impact would be “minimal,” the Journal reported.
“The main drag will be from lower global demand, directly from China but also from lower growth in [emerging markets],” Nathaniel Karp, chief U.S. economist at BBVA told the Journal. “However, the impact will be modest.”