One of the things I love to ask people wherever I go (and yes, cabdrivers especially) is how's business? How's the economy. I am constantly asking my clients that as well and most of them (no matter what the country, about which I am asking) are saying "it's okay." Not great, but not all that bad either. That includes China.
One thing that makes these conversations about China more relevant is that China's economic statistics tend not to be particularly reliable. Some blame Beijing for this. Others blame the local governments, whose salaries/bonuses/outlays are oftentimes based on how they are doing for their local economies.
So shadow figures are often used to track China's economy, with one of the favorites being electricity consumption. The thinking is that if China is doing well, electricity consumption will be increasing. I am less of a fan of this measure than many for the following reasons:
- It may be a decent measure of manufacturing growth/output, but it is not as good at measuring the service sector.
- Who says the electricity numbers are entirely accurate?
- They fail to account for changing weather conditions.
Thought of all this just now after receiving an email from a Shanghai friend that said the following:
Exactly what I've been saying….The coldest winter in decades accounts for the uptick in electricity and that's why BJ is surrounded by smog from their coal fired power plants. Economy here is weak. Glad somebody gets it.