Advertisement
Advertisement
China economy
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
The central government has ordered authorities in southern China’s Guangdong province to stop publishing economic data for its manufacturing sector. Photo: Reuters

China tightens control of local economic data ahead of expected weak growth next year

  • Authorities in Guangdong, nation’s manufacturing powerhouse, told all future purchasing managers’ indexes will be produced by National Bureau of Statistics
  • Ruling comes ahead of what is likely to be tough start to 2019 for China’s economy as trade war bites

China’s central government has ordered authorities in the country’s export hub, Guangdong province, to stop producing a regional purchasing managers’ index for the manufacturing sector as it seeks to control the flow of sensitive economic data.

The order by the National Bureau of Statistics (NBS) means the province will now not release purchasing managers’ index (PMI) data for either October or November.

The move comes as Beijing looks to tighten its grip on the dissemination of economic news amid the trade war with the United States. Industry insiders and analysts raised concerns about what the move means for disclosure of the real impact of the conflict on local businesses.

US trade war weakens China’s position as global leader in automation and robot manufacturing

The demise of Guangdong’s PMI came unannounced as the Guangdong government just stopped releasing the data.

When an individual inquired as to why Guangdong had stopped releasing its own PMI, the Guangdong Industry and Information Technology Department issued a brief statement on December 10, buried deep in the website, saying that it had received a notice from the NBS at the end of October and was told that all PMI compilations must be conducted by the NBS. Given this directive, it decided to stop compiling and releasing the provincial PMI from November 1 on.

Phone calls to the NBS information office went unanswered on Monday and the bureau has not replied to faxed questions from the South China Morning Post.

The Guangdong provincial PMI, complied by the Guangdong’s Industry and Information Technology Department, has been released on a monthly basis since November 2011.

When the Guangdong government decided to produce its own PMI that year, it said in a statement that Guangdong, which is a global manufacturing hub, was in need of its own PMI to help inform economic policymakers, enterprises and analysts so that they could accurately predict economic performance of the province and even the whole country.

“For instance, Chicago used to be the heartland of US manufacturing, and the Chicago PMI is often regarded one of the most significant [US] economic indicators by economists,” the Guangdong government said then. The Guangdong PMI is calculated based on a survey of 1,000 key enterprises in the province.

China takes steps to support jobs as trade war starts to hit employment

Peng Peng, vice-president of the South Nongovernmental Think Tank in Guangdong, said the demise of the provincial PMI would be a loss to the local business community.

“Guangdong’s monthly PMI was an important lead indicator showing China’s real economic situation,” he said.

Guangdong’s Department of Industry and Information Technology has been told to stop releasing its manufacturing data. Photo: EPA-EFE

Without it, local companies would have to rely on official statistics reported by the central government – via the NBS – or on official views of how manufacturing companies were doing in China, he said.

China’s export base hit by trade war offers sweeteners to lure professional services firms

The owner of an export-oriented manufacturing business in Guangzhou, the capital of Guangdong, said he was concerned by the central government’s move as it suggested the economy might be in even worse shape than he thought.

“Timely and transparent PMI data is not only important for Guangdong companies but for all businesses nationwide, because Guangdong is China’s main economic engine,” said the person, who asked not to be identified.

“I’m actually worried about the official move. I think the situation in the manufacturing sector will be really bad in the coming year, and that might be why Guangdong’s provincial monthly PMI needed to be shut down.”

The Guangdong PMI for the manufacturing sector actually rose in September to 50.2, from 49.3 a month earlier. Readings above 50 points indicate the sector is expanding.

It is not the first time China’s statistics bureau has tightened control over PMIs not produced in house. The bureau in 2015 ordered a private compiler of a Chinese PMI to stop releasing preliminary readings that came out a week before the official release.

The tightened control by NBS over Guangdong’s PMI comes at the same time as the statistics bureau reduces the autonomy of local governments to produce their own gross domestic product data.

According to a notice issued by NBS in October 2017, the NBS will compile provincial GDP figures directly from 2019 onwards, taking over the work of local provincial statistics bureaus, so that the gaps between provincial and nationwide GDP data would be smaller. The NBS notice at that time only mentioned GDP data and did not touch on other indicators such as PMI.

Post