China’s GDP - brought to you by the Ministry of Propaganda

China’s GDP came in at 6.9% according to the announcement this morning.

It is one of those numbers that appears almost magical. It’s above most analysts’ expectations, but just a shade below the official target of “about” 7%. It’s almost as if the number was presented by the Ministry of Propaganda, such is the power of the message it delivers.

Let’s face it - the elements that go into China’s GDP have been printing poor results in the last 3 months. International trade is down, industrial production sluggish and infrastructure development has been more talk than action. Consumer spending has not set the world on fire while only services industries seem to be reporting good results.

AS well, we saw a wild ride on China’s stock market through the quarter. The stock market has only a small impact on China’s GDP numbers, but the episode put a dent in peoples’ confidence in the government’s ability to manage the economy.

Which leads us to the theory that messages from Beijing are now designed to re-instill confidence. The people need China’s GDP to be on or very close to the mark, just as the Party needs the citizens to have faith in them. Remember - 99% of Beijing’s public statements are for its domestic audience. The message this morning is, “things are not so bad after all”.

One interesting side note that I haven’t seen many commentators pick up on is that the National Bureau of Statistics has adjusted the way it calculates China’s GDP. I am still trying to understand exactly what difference the new method makes to the results.