This Friday, economists, market analysts and traders around the world will pore over Beijing's monthly data dump – covering everything from China's industrial output and retail sales to inflation and investment in fixed assets – in search of fresh clues to the health of the world's second-biggest economy and key driver of global growth.
In scant hours of data scouring, the number-crunching crowd can develop a decent snapshot of how the Chinese economy is faring and what sort of risks inflation might pose. The releases typically send ripples – and, occasionally, waves – through global equity, currency and commodity markets.
But underlying DD day are nagging concerns about the quality of the information.
Beijing has given the skeptics plenty of ammunition over the decades to shoot down published numbers on industrial production, gross domestic product, consumer inflation, household consumption, problem bank loans and a gaggle of other indicators, acknowledges Tom Orlik, author of a new book on the subject, Understanding China's Economic Indicators.
"In the popular imagination, the production of China's economic data is regarded as a crude political farce: the controlling hand of the Communist Party intervening arbitrarily to direct the level of key indicators before they are published. In the past, that image was not too far from the reality," he writes in his how-to guide, which is designed to lead investors through the Chinese data jungle and show them how to separate the wheat from the chaff.
Along the way, Mr. Orlik, an economist who plies his craft as a journalist with the Wall Street Journal's Beijing bureau, seeks to dispel some myths about China's economic soundings. His conclusion: The Chinese don't deliberately cook their figures for GDP growth (still running at 9.5 per cent annually, but expected to slow in the months ahead), inflation (a troubling 6.5 per cent) and other economic indicators, at least not at the national level. Their main problem in gathering accurate, timely information today stems not from political interference but from the rapid growth and sheer size of the economy they are trying to measure.
Senior party leaders realized it wasn't doing China any favours to post unrealistic numbers, Mr. Orlik said in an interview from Beijing. "It doesn't help them, because it means they've got an unrealistic view of what's going on. In the long term, people will realize that they can't believe the numbers, and that will really dent faith in the Chinese story."
A lot of the data corruption in earlier times occurred at municipal, provincial and regional levels, where bureaucrats were anxious to deliver what their political masters wanted. Disappointing statistics could curtail careers, while superior numbers could get one noticed in inner party circles.
This still occurs. The combined GDP numbers for the first half of this year produced by more than 30 lower rungs of government came in two trillion yuan higher than the total released by China's National Bureau of Statistics.
Some China bashers see the economy as one giant bubble destined to explode, inflicting severe damage on the global economy, not to mention the hordes of investors who have bought into the miracle growth story. But Mr. Orlik, who once toiled for the British Treasury, doesn't see it that way. Looking at China's low GDP per capita, rapid urbanization and continuing efforts to catch up to the West, he argues that the country still has a few more years of rapid growth ahead.
He also challenges the dark view that China's fragile banking system will not be able to weather the flood of bad loans stemming from a government-ordered credit binge designed to keep the economy humming during the global financial crisis and recession of 2008-09.
"There's a problem there," he acknowledges. "It will become clearer in the next couple of years how big that problem is. It's not going to be a catastrophe."
As for the economic stuff, Mr. Orlik is confident the stats gatherers will only get better at their job, spurred on by public demand for accurate information. "If they put out numbers that don't make a lot of sense, they get a lot of criticism [on Chinese Internet sites] So there's an increasing pressure on them to raise their game."
Economic data are not some sort of abstraction. They measure "something real which happens in people's everyday lives. People have a lived experience of what's going on with wages, with growth, inflation and house prices and they see reports in the press and know that house prices have gone up not the 5 per cent the government says, but 50 per cent. And their wages haven't gone up at all."
And what about investors looking on from afar? People should pay more attention to the trend than the last decimal point for production, investment or even GDP, he says. "Because things are changing too fast, and the economy is too big and complicated for them to measure it with a degree of precision."