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In Search of Fluctuations: Another Look at China’s Incredibly Stable GDP Growth Rates

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Abstract

China’s official real GDP growth has held surprisingly stable in recent years. As national GDP figures influence both policy analysis and political decisions, the GDP growth rate of the Chinese economy has also great international implications. Taking the nominal GDP growth and price index data as given and experimenting with alternative deflators, this paper attempts to track missing fluctuations in real GDP growth in recent years. Real GDP growth in the constructed series decreased in 2015–2016, picked up in 2017, and again decelerated in 2018, in contrast to the rather stable official real GDP growth rates of these years. Furthermore, in recent years the constructed growth rate seems to be well below the official figures.

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Notes

  1. Xu Xianchun is a former NBS deputy director and head of the NBS Division of National Accounts.

  2. Data are extensively available from 1998Q1 onwards. However, because of the much-disputed Chinese real GDP growth rates during the Asian crisis (see for ex. Wu, 2007) only data starting from 2002Q1 is considered.

  3. Supremum Wald test for a structural break at an unknown break date.

  4. As stationary data are necessary in principal components analysis, the price index data for 2002Q1–2018Q3 are tested by the DF-GLS test by Elliott, Rotherberg, and Stock (Econometrica, 1996) and by the Phillips-Perron test. Both tests confirm the price index series can be considered stationary.

  5. The BOFIT Forecast for China is prepared twice a year and is part of the Bank of Finland’s international economic analysis effort. The forecast is available online at https://www.bofit.fi/en/monitoring/forecasts-for-Russia-and-China/forecast-for-china/.

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Acknowledgements

I thank an anonymous referee for useful suggestions that helped to improve the paper. I warmly thank Carsten Holz, Iikka Korhonen, Riikka Nuutilainen, Jouko Rautava, and Gérard Roland for insightful comments and valuable suggestions. I also wish to thank the participants at the Conference on China’s Economic Reforms jointly organized by the BOFIT, City University of Hong Kong, and Fordham University as well as the participants in the BOFIT Research Seminar at the Bank of Finland for helpful feedback.

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  1. Monetary Policy and Research Department, Bank of Finland, Helsinki, Finland

    Eeva Kerola

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  1. Eeva Kerola
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Appendix

Appendix

See Tables 1, 2, 3, 4, 5, 6, 7, 8 and 9.

Table 1 Official deflators, production, and expenditure side of GDP.
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Table 2 (With chart) OLS regression results and estimated deflators
figure a
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Table 3 Variables used in principal component analysis for the implicit deflator
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Table 4 Proportion of variance explained by 10 first principal components (three time spans)
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Table 5 (With chart) OLS regression results and estimated deflators
figure b
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Table 6 Correlation between the official implicit deflator and constructed alternative deflators (whole time span)
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Table 7 Correlation between the official implicit deflator and constructed alternative deflators, 2002–2011
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Table 8 Correlation between the official implicit deflator and constructed alternative deflators, 2012–2018
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Table 9 Extractions from BOFIT China Forecasts, 2015–2018
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Kerola, E. In Search of Fluctuations: Another Look at China’s Incredibly Stable GDP Growth Rates. Comp Econ Stud 61, 359–380 (2019). https://doi.org/10.1057/s41294-019-00086-z

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