Professor of Economics
China; GDP; Principal Components; Structural Break; Forecasting;
The authors use Chinese imports, measured as reported exports of trading partners, as a benchmark to gauge the accuracy of alternative Chinese indicators (including GDP) of fluctuations in economic activity.Externally-reported imports are likely to be relatively well-measured and free from domestic manipulation. Using principal components, the authors derive activity indices from a wide range of indicators. The authors choose a preferred index of eight non-GDP indicators based on their fit to Chinese imports, which they call the China Cyclical Activity Tracker (or C-CAT).The authors find that Chinese statistics have broadly become more reliable in measuring cyclical fluctuations over time. However, measured GDP has been excessively smooth since 2013, and adds little information relative to combinations of other indicators.