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BEIJING: The latest China's gross domestic product (GDP) growth figures have revived longstanding scepticism about Chinese official statistics and their accuracy as a gauge of activity in the world's fastest growing economy.
The GDP figures recorded growth from July to September at 9.4 per cent, almost exactly on par with the first two quarters, which came in at 9.4 and 9.5 per cent respectively.
Economists said the smooth growth this year and also in late 2004 were suspicious because they were so at odds with other economic indicators.
Jim Walker, an economist with CLSA, the brokerage in Hong Kong, said the official GDP statistics were a "fantasy world".
"The Chinese economy expanded 9.4 per cent year-on-year, basically the same as in the first and second quarters, despite the fact there has been a major deterioration in the external contribution from the second to the third quarter that should have chopped GDP growth substantially," he said in a research note.
China's trade surplus dropped substantially in September, something many economists expected to register in the third quarter because of the relatively high contribution of net exports to growth this year.
"Moreover, the Purchasing Managers' Index, both ours and the Chinese one, show the manufacturing sector growing more slowly in the third quarter," said Dr Walker. "The GDP numbers, of course, do not."
But while there is much agreement about the reliability of the Chinese figures, the real pace of growth in China is highly contested.
CLSA economists believe the economy has slowed to about 8.0-9.0 per cent this year, while a number of other houses recorded a sharp upturn in construction and growth in the third quarter.
"Right now, it looks like a reacceleration story in real terms," said Jonathan Anderson, of UBS, the brokerage, in Hong Kong.
Economists at foreign investment banks have long used their own GDP calculations to guide their analysis for China rather than rely solely on official figures.
Since 2003, their in-house calculations have recorded China's GDP growth fluctuating substantially, from a high of 12-13 per cent to 9.0 per cent, a much greater degree of volatility than the official statistics.
The National Bureau of Statistics in Beijing has worked hard in recent years to "squeeze water" out of the GDP statistics reported to it from provincial bureaux.
The provincial statistics invariably exceeded the target growth figure set by Beijing, to ensure that local officials were not punished for their poor management of the economy.
The national office has now established parallel reporting lines to avoid such distortions.
Economists said the real problem was that Beijing still calculates GDP through counting increases in value-added production reported to it largely by state-owned enterprises, which provide poor data.
Another FT Syndication Service report by David Turner from Tokyo adds: Japan's economy is continuing to recover gradually but progress across the country has been uneven, the Ministry of Finance (MoF) said late last week as it released a quarterly survey from its regional bureaux. The ministry also urged "caution" over the impact of higher oil prices.
Its conclusions echoed earlier reports from the Bank of Japan's regional research divisions.
The MoF upgraded its assessment of the Kanto area, which includes Tokyo, but downgraded its assessment of Hokkaido, the northernmost of Japan's main islands. The ministry's Hokkaido bureau said profits appeared to have fallen in the six months to September.
The Bank of Japan had recently issued a similarly discouraging quarterly assessment of Hokkaido. Whereas the other eight regions of Japan had shown signs of improvement, in Hokkaido "economic activity remains virtually flat", the BoJ said.
Parts of Hokkaido, formally annexed by Japan in 1869, remain relatively isolated. Some analysts say consumers in the sparsely populated region, where people are more reliant on the car than in many other parts of Japan, have been particularly hard hit by the rise in energy prices.
The ministry was especially bullish about western Japan's Kinki region, which includes Osaka and Kobe, pointing to "signs of production expansion", partly due to a rise in shipments of electronic devices and machinery. The Kinki region also saw the steepest quarterly upgrade from the Bank of Japan of all nine regions.
The Japanese government and central bank have both remained relatively cautious about Japan's economic recovery compared with many private-sector economists, particularly those at overseas investment banks. At the same time, however, economists have warned that any attempt by the government to raise taxes too quickly to cut its huge fiscal deficit could stall recovery.
The ruling Liberal Democratic party's fiscal reform research panel lately added to calls from other fiscal experts for a rise in consumption tax to help close the deficit.
Junichiro Koizumi, the prime minister, has said he will not allow a consumption tax rise during his time in office.
Yet another FT Syndication Service report by Song Jung-a from Seoul said: South Korea's economy grew at the fastest rate in almost two years in the third quarter, driven by the recovery in domestic demand and strong exports.
Gross domestic product (GDP) rose 4.4 per cent year-on-year in the period from July to September, following a 3.3 per cent increase the previous quarter.
GDP was up a seasonally adjusted 1.8 per cent from the second quarter, when it grew 1.2 per cent.
The stronger-than expected third-quarter growth is likely to put pressure on the Bank of Korea to further tighten its monetary policy, with higher oil prices already fuelling inflationary pressure in Asia's third-largest economy.
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