For decades, many have questioned the accuracy and authenticity of Chinese official GDP figures. And a period of abnormally smooth and consistent growth in line with the decade-long real GDP target set in 2012 has only strengthened these concerns (Chart 1). Also, real GDP figures lost all normal fluctuations, complicating any analysis. But a recent BIS working paper exploits provincial macroeconomic data to reveal new insights into Chinese GDP growth. They find:
Provincial data, particularly on credit, inflation and investments, is a good method for tracking nominal GDP growth in China.
When looking at the determinants of Chinese growth over time, growth driven by the reallocation of labour has predominantly run its course.
Instead, domestic demand components, such as government expenditures, credit growth and house prices, have largely driven growth since 2010.
These new growth drivers are playing an increasingly prominent role across all provinces in China, helping to make growth more homogenous.
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