High Frequency Economic Indicators for China


Source: Hatzius/Struyven, “A viral global slowdown,” Top of Mind, Goldman Sachs, Feb 28, 2020.

Goldman Sachs now forecasts (nowcasts) -6% q/q AR growth in Q1, down from -0.5%.

25 thoughts on “High Frequency Economic Indicators for China

  1. pgl

    Negative 6% growth would be serious not just for China but for the rest of the world. What was the old line – when the US sneezes the rest of the world catches pneumonia. So the new line is – when China catches coronavirus the rest of the world catches ….

    Leave it to others to finish this sentence!

    1. Willie

      This is one of those things that will whiz past heads associated with the orange guppy until it is too late.

    2. Barkley Rosser

      Japan had the neg. 6% growth rate in 4tth quarter of last year. Not sure what you are talking about here. Japan last quarter? That is serious and due to their raising the consumption tax. But it you are taking about something besides that, what is it, pgl?

  2. David O'Rear

    Until and unless China consistently produces data that is widely recognized as being of the same quality as that found in many — but not all — OECD economies, the idea of using highly data-dependent analysis to understand what is happening is, well, a sham.

      1. Moses Herzog

        I’m as harsh on China as anyone, (I give them hell at the appropriate moments, do I not??) Mr. O’Rear’s comments were overdone—the numbers are still very worthy looking at. Really all you have to do is add “an error term” to most of these numbers. Which maybe what GS does for all the hell I know. I don’t think GS is generally in the habit of quoting numbers that mean nothing—not that I’m telling you anything you don’t know Menzie, just wanted to take your side on this.

      2. David O'Rear

        What gives you confidence in coal consumption data?
        o The main users are large, SOE power producers, but any improvement in productivity would slow demand.
        o Smaller users, such as sub-county or enterprise-specific power generators, are very unlikely to be captured in the data.
        o And, at the end of the day, there isn’t a culture of producing and reporting honest data just because it’s your job to do so.

        Finally, if that one data point is the only one in which you have OECD-level confidence, what does that say about the overall attempt to use a broad range of data in a high-frequency model?

        1. Ulenspiegel

          “What gives you confidence in coal consumption data?”

          Consumption of coal gives pollution that can be measured by satellites. Reduction of pollution indicates, therefore, reduction of coal consumption. You can also count individual generating/shut down power plants by observing exhaust….

          ATM a lot points to a reduced coal consumption.

          1. David O'Rear

            I recall a story about closing a single aluminum refinery for routine maintenance, and how it played havoc with the energy data. As for satellite evidence of pollution, I seriously doubt such data would be available for high-frequency economic forecasting.

            Given that provincial GDP data exceeds the national numbers, one can assume (a) the central government subtracts 3-8% of GDP in value each year; or (b) there’s a problem with the data.

            Stick to the obvious answer: the data suck.

          2. Menzie Chinn Post author

            David O’Rear: I think the issue of provincial gdp exceeding National is past; last revision National was revised up to provincial. If we can use satellite imagery for Puerto Rico post Maria, we can image China for electricity consumption.

        2. David O'Rear

          If you have a full set of the 2020 revisions then your sources are better than mine.
          What I’ve seen still has massive holes, and that’s just the annual data!

    1. Anonymous

      Doubt the numbers. Huh – the Judy Shelton mantra. Maybe Shelton should lead the Trump response to the coronavirus crisis.

    2. macroduck

      So…we should not assess the economic health of the world’s largest economy because data available from that country are less reliable than data from rich countries? That seems to be the alternative you would leave us. Or perhaps we should use something other than economic data to assess China’s economic health. Astrology? Both those approaches seem foolish. Instead, economists do the best they can with what’s available, a long-honored practice every profession I can think of.

  3. AS

    I have heard from various media sources recently that the US receives many drugs and supplies including medical gloves and masks from China. Since the US is reported as having a shortage in several medical supply items that we no longer manufacture (according to some media sources), what should be done if reports are true?

    Should we have tariffs on some of the medical items to encourage the US to begin again to produce vital medical drugs and supplies, so as not be short during epidemics or to be cut-off if we have a serious tiff with China?

      1. AS

        I agree with you that now is not the right time to discourage imports, just wondering if we need to consider ways to stimulate US production of essential drugs and medical supplies. The weekend WSJ has an article discussing that China makes many ingredients for generic drugs used by US citizens.

        Perhaps after the epidemic ebbs, may be worth considering tariffs.

        1. Moses Herzog

          I’m not sure if I can be completely convinced on this, but I will say you can make a stronger argument on national security grounds than many other tariffs trump has done. I don’t know….. I can almost sense Menzie groaning in exasperation when he reads these type back-and-forths.

  4. AS

    The 1957 flu pandemic seems to have some similarities to the current times.


    We also suffered a bad recession in the 1957+ time frame. Above my paygrade to determine how much the responsibility flows from the pandemic compared to reputed causes emanating from contraction of the money supply as reported by the following source

    1. macroduck

      Monetary and fiscal tightening, falling auto sales in part due to the failure of the Edsel, slowdown in business and household sector fixed investment perhaps due to overshoot in recent years. In the 1957 episode, a vaccine was developed relatively quickly, which helped limit the spread.

      A big difference now is that China, which was the source of both the 1957 epidemic and this one, is now the largest economy in the world and widely entangled in supply chains. That was not the case in 1957.

      1. Moses Herzog

        My maternal grandfather bought a Hudson (not only that, which was bad enough, he bought a Hudson after they had been discontinued). That fact alone will tell you a lot about the mean average intelligence of my mother’s side of the family. Which is incredibly frightening on the rare occasions I dare to take a moment to think about it.

  5. Moses Herzog

    I wonder what Xi Jinping’s next public brainwashing circus show is going to be?? Based on recent experience, Xi should be touring a Beijing Hotel, hundreds of miles from Xinjia Hotel any day now, telling the public “in this great fight ‘of the people’s’ ” that he knew “weeks ago” the hotel was going to collapse. And then, that will make a very educated populace think to themselves “Oh…… Chairman Xi, knew about this weeks ago…… I feel better NOW”.

    I’ve been pretty near to there before. I had an “internet friend” I went to visit in Fuzhou city for about 1 week. That city is only two hours North of Quanzhou. But that’s really the only time I spent in South China after being in the Northeast quite awhile. I took the train all the way south from Dalian along the eastern coast line (the first portion may hitch north, I’ve honestly forgotten now). Fuzhou is a great city, and there’s parts of it which have Japanese architecture still standing there, which is quite weird if you think of how far south Fuzhou is. I was pretty shocked when my friend showed me those buildings. Like most of China, when I went (maybe 2005?? I can’t remember exact) it was quite the fascinating little place just to wander around and a different “feel” to it than the north, though you still saw some more “universally China” things there (50,000,0000 maroon VW taxis by the city block).

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