[FOUNTAIN]A wary view of China’s economic data

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[FOUNTAIN]A wary view of China’s economic data

Statistics are a matter of choice. Which statistics you choose and how you interpret them is more important than the sheer numbers. Sometimes you can derive completely different conclusions from the very same statistics.
Data on the Chinese economy have recently produced numerous interpretations. What the statistics really mean is an issue of international debate. The confusion began with the trend in foreign direct investment, the so-called engine of the Chinese economy. From January to November last year, foreign direct investment in China was $47.2 billion, up 0.2 percent from the same period in 2002.
But the monthly data tell a different story. From January to May, foreign direct investment flocked to China, but the inflow slowed in the second half of the year. For the month of November, foreign direct investment was down nearly 40 percent.
Analysts say that severe acute respiratory syndrome caused the slump. At the height of the SARS outbreak, investors decided that concentrating their investment in China was risky, and so they sought to diversify.
But others consider the drop in foreign direct investment a temporary slump. China still attracts the greatest amount of foreign direct investment. Also, the Chinese government recently forecast that the growth rate for 2004 would reach an impressive 7 percent. Investment, exports and consumption all look promising.
But other statistics do not permit blind optimism. China can manufacture 86 million color television sets every year, but its domestic consumption is only 30 million, less than half of its production capability.
The mobile telephone industry is in a similar situation. According to one statistic, China produced 180 million cellular phone handsets last year, and 20 million units were left unsold.
So far, thriving exports have absorbed the oversupply. But in the color TV and textile sectors, China is starting to experience friction with its trade partners.
China might not be happy with the statistics. But investors are given a chance to calmly re-examine the Chinese economy. Japanese companies are already saying that when moving into China, they need to be careful not to be fooled by the media, especially when the news paints too rosy a picture of the Chinese economy.

by Nahm Yoon-ho

The writer is a deputy city news editor of the JoongAng Ilbo.
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