W.Edited by Li KeqiangWhen China’s prime minister made his final speech at the National People’s Congress on March 5, it was already clear who his successor would be. However, the successor to the “Li Keqiang Index” has yet to be found. This unofficial measure of China’s economic growth was inspired by a leaked conversation Li had with a US diplomat when he was party secretary in Liaoning province.Mr. Lee, the Ministry of gdp The numbers were “unreliable”. Instead, he focused on electricity consumption, rail freight and bank lending. The newspaper took a cue from Li and thought it would be fun to see what his three indicators combined into a single indicator revealed about China’s economy at the national level. .
The index has performed well since its introduction in 2010. Bloomberg has a version that has its own “ticker”. This has affected similar indicators in India. A team of researchers from the San Francisco Federal Reserve Bank and the New York Federal Reserve Board tested the usefulness of Lee’s preferred metric. In a paper published in 2017 by Hunter Clarke and Maxim Pinkowski of the New York Fed, along with Xavier Saray his Martin of Columbia University, the optimal combination of the three indicators gives about 60% weight to lending and 30% to power. calculated to give 10% for rail freight. In a subsequent paper, Clark, Pinkowski, and Jeff Dawson of the New York Fed suggested replacing lending with: meters2, a measure of the money supply. Bank credit figures failed to capture the government’s crackdown on shadow lending.
Critics argue that China’s economy’s declining energy intensity is undermining the index. But it’s not entirely true. As long as electricity follows an identifiable trend, deviations from the trend reveal economic ups and downs. It was the covid-19 pandemic that really broke the Li Keqiang Index. The declines in retail sales, air travel and property markets were much more dramatic than those in industry, electricity use and rail freight. in the meantime, meters2 increased rapidly at the end of last year as people hoarded cash.
What are the alternatives? Those skeptical of China’s data yearn to escape China’s statistical system altogether. Can night-light brightness recorded by satellites provide a truly independent guide to growth? But this measure has its own problems. The newer satellite didn’t have a long track record, and the older satellite struggled to distinguish between bright city lights and very bright lights.
Pinkowski and his co-authors used night lighting not as a direct measure of growth, but as a way of judging other potential proxies. If so, it should also be excellent at tracking growth. meters2) Electricity and (to a lesser extent) rail freight and retail sales are useful indicators. Adding them would have certainly made a difference during the pandemic.
A diplomatic cable revealing the indicators that China’s supposedly new premier, Li Qiang, has yet to reveal. He previously served as party leader in Shanghai. gdpWhen Li Keqiang first revealed the components of the index named after him, the Rust Belt’s comparable figure in Liaoning was only 40%. It is no exaggeration to say that we are not ignoring the service sector of the Chinese economy. ■
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