Modeling Trends, Cyclical Movements, and Turning Points of the Chinese Economy

• Activity Number: 412
• Type: Topic Contributed
• Date/Time: Tuesday, August 6, 2013 : 2:00 PM to 3:50 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Ataman Ozyildirim*+ and Harry X. Wu
• Companies: The Conference Board and Institute of Economic Research, Hitotsubashi University, Tokyo
• Keywords: Coincident and leading economic indicators ; trends, cycles and turning points ; GDP ; Chinese macroeconomic statistics

Abstract

This study appraises The Conference Board (TCB) coincident and leading economic indices (CEI and LEI) for China with a focus on China CEI. The evaluation is mainly based on a critical discussion of the major data problems in the Chinese official statistics and their implications in modeling China's macroeconomic dynamics, and a development of a set of new commodity indicators as alternatives to some of the components in the existing TCB China CEI and LEI. It also examines the trends, cyclical movements and turning points in the Chinese economy as identified by the TCB China indices. Our empirical findings through regressions show that despite the data problems the existing TCB China CEI is robust in predicting the cyclical movements of GDP. However, commodity-based indicators which tend to pronounce the variations of industrial output indeed better model the dynamics of GDP.