Top 7 Economic Indicators For The Chinese Economy

Investors interested in making trades that involve the Chinese yuan might benefit from doing some research into China's economy. The nation has repeatedly made headlines over the last several years, generating attention by producing robust growth.

Economic Skepticism

Despite reports of growth, some have voiced concerns about the country manipulating its government data.[1] Even Li Keqiang, Premier of China's State Council, has made skeptical remarks about these figures. In 2007, he said that China's GDP figures were "man made" and were therefore not dependable. Further, he described them as being "for reference only."[2]

Certain market observers have articulated worries that the slowdown China suffered in 2015 points to the potential for economic collapse.[3]

Given the aforementioned considerations, it may be helpful to know which economic indicators can be verified independently. This article contains some indicators that can be confirmed by sources other than the Chinese Government.

1. The Keqiang index

Investors may be interested in knowing which economic indicators Li, the Asian nation's top economic policy maker, holds in high esteem. He has stated that he prefers to gauge China's economic strength by looking at its electricity consumption, disbursement of bank loans and rail cargo volumes.[4] In 2010, The Economist combined these three indicators into the Keqiang index.

Many researchers have started using their own adaptations of the Keqiang index, which track measures comparable to those used in the index named after Li.[5] For example, macroeconomic research firm Capital Economics has created the China Activity Proxy, which is based on electricity output, freight volume, passenger numbers, seaport cargo volume and the amount of floor space currently being built.[6]

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2. Export/Import Data

Traders interested in evaluating economic conditions in China may consider looking into export and import data, as this information can be confirmed by checking it against the trade figures supplied by China's trading partners.[1] Many analysts have emphasized that this aspect of Chinese export and import data makes it dependable.

3. Electricity Consumption Data

While Li has singled out electricity consumption data out as being a reliable indicator, he is not alone in having faith in the measure. Ting Lu, a China economist for a major global financial institution, has emphasized that the nation has little reason to inflate the figures for consumption of energy such as electricity, as Beijing imposes usage limitations on local governments.[7] Alaistair Chan, an economist for financial analytics provider Moody's Analytics, has also spoken out about the soundness of the measure.[8]

4. The OECD Composite Leading Indicator

In the 1970s, the Organisation for Economic Co-operation and Development created the OECD composite leading indicator ("CLI") as an early way to help measure economic activity.[8] Chan has praised the CLI, stating that when this particular indicator changes, it helps signify some alteration in conditions.

The CLI can be quite helpful in foretelling when China's growth will undergo shifts, he emphasized.[8] As a result, he believes the indicator is one of the more dependable ones in terms of evaluating China's economy.

5. Rail Cargo Data

Rail cargo data may receive far less exposure than GDP, but Li has asserted that it is a more dependable measure of economic strength.[1] He has emphasized that the whole basis for these figures is transportation of goods across a country, which helps indicate industrial activity.

Li added that while this measure does not have a tendency to be manipulated, it does have some shortcomings.[1] More specifically, he noted that rail freight measures the gross weight of the cargo, and would not differentiate between shipments of "coal" and "cars," for example.

6. Outstanding Loan Growth

Outstanding loan growth, which measures year-over-year changes in aggregate loan amounts denominated in both domestic and foreign currencies, is reported by the People's Bank of China.[11] Between 2002 and 2015, this measure averaged 17.2% growth. Falling to as little as 10.6% in February 2002, the nation's outstanding loan growth surged to 34.7% in November 2009.

7. Purchasing Manager's Index

Investors looking to conduct their due diligence on China can make use of both the official PMI and the HSBC PMI, which have the reputation of being quite dependable. Both of these indicators are "based on surveys and generally match other indicators of activity, such as industrial production and GDP" and are therefore more trustworthy.[1]

The HSBC PMI focuses more on small and medium-sized enterprises, which can cause it to produce different figures than the official PMI. In terms of recent figures, China's official manufacturing PMI remained below 50 between August and November 2015, pointing to contraction in the sector.[12] In November, this activity sank to a three-year low.

The official services PMI provided more encouraging data, yielding readings of 53.1 and 53.6 in October and November 2015, respectively.[13] China's services sector is a major contributor to GDP, so these reports helped alleviate concerns about flagging economic growth.


While the situation surrounding China's government figures may seem confusing, investors can obtain greater clarity by sticking to specific indicators when evaluating the nation's economy. Seeking out these measures may require additional time, but it can also provide a more accurate depiction of business conditions in China.

FXCM Research Team

FXCM Research Team consists of a number of FXCM's Market and Product Specialists.

Articles published by FXCM Research Team generally have numerous contributors and aim to provide general Educational and Informative content on Market News and Products.



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