China’s National Bureau of Statistics, which pumps out the country’s economic data, has a big job, even though it has about 100,000 staff nationwide to do it.

In an economy as large as China’s that includes a still huge informal sector, figuring out which direction any particular economic metric is heading, much less quantifying it accurately, is daunting. This certainly applies to retail sales, so after months of reporting that sales are skidding close to zero growth, it is no longer possible to ascertain if there is in reality any growth at all. Interestingly, the Bureau doesn’t present its retail stats with a margin of error, but simply puts out a point estimate.

This effectively means that with growth rates as low as they are currently reporting, we don’t know if growth is, in reality, above or below zero. The figures are further muddied by the fact that local and provincial governments have frontline roles in compiling the information for their own jurisdictions before on-reporting to Beijing, and there are incentives for them to make sure the numbers are “according to plan”. Considering that there are more than 3,000 county, prefecture and provincial-level officials involved in the data collection process, the opportunities for mistakes, both intentional and otherwise, seem endless.

The chances are that China is already in, or close to, a retail recession. If we suspend all our disbelief and take the government’s numbers verbatim, about the best you can say is that things are not improving. 4 per cent year-on-year.

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