China to change GDP methodology
The market has be sceptical of Chinese data, and with good reason. China supposedly grew amid the Asia crisis in 1998. Wikileaks reported in 2010 that soon to be leader Li Keqiang said that China's GDP is man made and unreliable
We take Chinese data with a pinch of salt but in most cases it's all we've got so we have to run with it. Whatever we believe to be the truth doesn't matter as it's the reported numbers that move the markets
That's all set to change with China announcing today that it will be switching its GDP calculation methods in line with other major economies. In doing so it will lead the way to adopting the IMF's SDDS (Special Data Dissemination Standard)
Data will now be calculated on the economic activity in each quarter rather than culminated numbers that were provided by regional officials
The new methodology will be used for the 19th October Q3 GDP release, though it's unclear whether they will be revising prior data under the new system straight away
Will it mean the end of the scepticism? I very much doubt it, particularly if the new calculations derive numbers that match the old ones. It's a step in the right direction so at least that's something. What is important to watch is the increased in risk surrounding the release that the Chinese numbers could confirm what many believe, that China is growing less than advertised
It's going to make the October release a big one to watch and if we're still waiting on the Fed, volatility is going to be high
Reuters has more here
