China GDP Preview: What you see is what you will get

The Chinese National Bureau of Statistics will release first quarter gross domestic product at 2:00 am GMT, April 17^th                  

Forecast

China's annual gross domestic product (GDP) is expected to decline to 6.3% in the first quarter of 2019 from 6.4% in the final three months of 2018.  On the quarter it is projected to slide to 1.4% from 1.5%.

China: Consistent statistics

Chinese GDP has been declining steadily for six years, from 8.1% in the last quarter of 2012 to 6.4% in the final three months of 2018. Long gone are the days when Beijing avowed that 8% was the lower limit of acceptable expansion.

From the fourth quarter of 2012 to the fourth quarter of 2013 annual GDP declined 0.4%, for the same period to 2014 the drop was 0.5%, to 2015 it was again 0.4%, through 2016 and 2017 there was no change.  From the final quarter of 2017 to the end of 2018 the decrease was 0.4%.

Reuters

If the pace is measured and constant by Western standards that has more to do with the bureaucracy providing the political chiefs in Beijing what they have predicted than any superior stability in the Chinese economy.

Gross Domestic Product: Everyone is watching

Gross domestic product is the premier Chinese economic statistic. It is the measure of the success of the economy and is taken as proof that the central government is bringing prosperity to the Chinese people.

The authorities in Beijing announce the GDP goals for the economy at the beginning of the year. No surprisingly, given the incentives, positive and negative in such a centralized bureaucratic reporting system, when the statistics are released the result almost always seems to match.  

There has been studied reliability between the market forecasts and the actual statistic. In the last five years the estimate for the quarterly annual growth has not missed by more than 0.1%. That is unusual to say the least. In the last five years, 20 quarters, the consensus market judgment has never been off by more than 0.1%.

Are the analysts estimating Chinese economic growth especially astute? Yes after a fashion. They are excellent listeners.  They know that the official figures, especially for GDP, will confirm the government’s prediction.  

Do not look for trading suspense from China’s GDP numbers.  The odds are very much that first quarter GDP will be no more than 0.1% from the 6.3% consensus estimate.  In China meeting the goals of the five-year plan has a long and impressive history.