Focus topics

The Keqiang index as an alternative to GDP

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  • The discrepancy between China’s reported GDP growth in the first quarter of 2022 and the largely static activities in the real economic has aroused fresh doubts over the credibility of the official economic data​
  • Against this background, the Keqiang index, which consists of the weighted average of growth in railway freight, growth in power consumption and growth in mid-to-long term bank loans, is reemerging as a useful alternative to observe China’s real economic conditions​
  • The index was established by the Economist starting in 2010, after it was reported that Li Keqiang, the Premier, uses the three indicators to monitor China’s economic development in parallel to official indicators​
  • The Keqiang index turned out to be a good indicator for industrial production and has high relevance regarding global commodity price movements (source: CME group)​
  • However, many experts argue that the index has not captured the transformation of China’s economy towards a more technology- and service-driven one, thereby gradually losing its meaningfulness​
  • Amid the severe disruptions caused by the Covid pandemic, the Chinese government is adopting yet another large-scale economic stimulus program, to some extent comparable to the stimulus during the Financial Crisis, aiming to support infrastructure investments, reducing business burdens and stimulating consumer confidence​
  • Under these conditions, the Keqiang index becomes again more powerful reflecting the overall economic growth amid investment-driven recovery while largely avoiding potential data manipulation issues ​
  • The Keqiang index in April and early May of 2022 shows a worrying picture of the Chinese economy, warning policy makers they have mounting challenges to address​

Sinolytics is a European consulting and analysis company specializing in China. It advises European companies on their strategic orientation and concrete business activities in the People’s Republic.


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