Data With Chinese Characteristics

Commentary
China released its latest GDP figure showing strong 6.3 percent year-on-year growth in the second quarter. There is, of course, a low base effect in play, given the 0.4 percent year-over-year growth in 2022Q2. A simple way to adjust such an effect is to sum the two numbers that differ by four quarters. The growth in 2022Q1 and 2023Q1 are respectively 4.8 percent and 4.5 percent. If the economy was performing similarly in the previous two quarters, then the growth of 2022Q2 plus 2023Q2 should roughly be 4.8 percent plus 4.5 percent, which means 2023Q2 should roughly be 4.8 percent plus 4.5 percent minus 0.4 percent equals 8.9 percent.
A number lower than that means the economic growth was declining regardless of a much higher number in Q2 than in Q1. Another way is to read the quarter-over-quarter figure. However, there could still be a “seasonal effect” that a statistical filter cannot completely remove. Such impact would be unavoidably obvious when huge items like bank loans or policy boosts are prone to happen in some specific periods of a year. A common seasonal filter cannot smooth out such large swings in typical communist nations….