Can You Trust China's Economic Figures?

Can you trust China’s official economic figures?

Beijing, China
Keren Su | Getty Images
Beijing, China

That’s a question for Fast Money Traders today as China prepares to release key inflation figures this evening. Economists largely expect that China will report consumer prices increased more than 5% in April, but that price growth decelerated from the prior month.

“I think the China numbers are going to be interesting,” said Fast Money’s Brian Kelly of Brian Kelly Capital Management.

Interesting and, if history is any indication, market-moving. Material stocks and commodities rose sharply Tuesday after China reported a much larger-than-expected $11.4 billion trade surplus. Materials Select Sector SPDR was up nearly 1% today after the data.

But, according to some reports, the government manufactures China’s official statistics. Diplomatic cables published by the whistleblower site Wikileaks earlier this year allege that key Chinese officials have admitted China’s GDP numbers and other reports are largely “man-made.”

The allegation laid bare in the diplomatic cables is supported by discrepancies between China trade data and data reported by China’s trading partners.

China inflation data is particularly problematic. China changed its CPI weightings this year to de-emphasize food prices and put greater weight on housing. Some economists argue the change clouds the data by focusing on a more volatile indicator.

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