The authors of the study mentioned in a previous blog post explain their paper succinctly here ….
“It has been well established that growth in nighttime light intensity is a good proxy for economic growth. By gauging how well changes in different economic variables correlate to fluctuations in nighttime light intensity, we can see which series are more reliable as growth indicators.”
“Looking back at the prediction for the end of 2015, we can reject the dire growth-collapse scenarios that were suggested by some of the Wall Street indices at the time, with it being very unlikely that the true growth rate of China was much below 6 percent. On the contrary, while we generally can’t reject that the official growth estimates are correct, we also can’t reject that they have understated Chinese growth since 2012, with the true level being closer to the average seen in the 2005-12 period. Our results are consistent with work by Rosen and Bao, who argue that Chinese statistical services have chronically underestimated the size of the service sector. Rosen and Bao’s hypothesis is consistent with our finding that rail freight growth should receive less weight than the other indicators in the Li Keqiang index. Hence, as the Chinese economy becomes increasingly service-oriented, the (conventional) Li Keqiang index will likely send increasingly faulty signals about the state of China’s economy. In fact, our estimate for Chinese growth shows an appreciable acceleration in 2016, even as the official growth rate remained virtually unchanged.”
Do read the whole thing…
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