China Sees Evolving Economy in Lower Energy Use Data

Data showing a drop in China’s energy use and an expansion in the economy reflect the country’s changing industrial structure, the government says, defending the quality of its statistics.

Data on China’s electricity consumption have long been used as a benchmark for industrial activity, given the often haphazard nature of other measures. But as the economy shifts toward services and less energy-intensive manufacturing, this practice may be misleading, the National Bureau of Statistics said in comments carried by state media Tuesday.

China’s power consumption in the first quarter of the year fell 4 percent from a year earlier to 781 billion kilowatt hours, while industrial output grew 5.1 percent. Overall, the economy expanded 6.1 percent.

A recent report by the International Energy Agency questioned the quality of Chinese data, noting that lower oil demand seemed to contradict the growth figures.

“That viewpoint is groundless,” the Statistics Bureau said in a question-and-answer commentary posted on its Web site. The IEA “mistakenly oversimplified the correlation between economic growth and energy use,” it said.

According to China’s statistics, overall energy consumption rose 3 percent in the first quarter of the year, reflecting a 7.4 percent year-on-year jump in the value of services, which consume relatively less electricity, it said.

Overall, services accounted for 44.3 percent of China’s gross domestic product in the first quarter, up from 42.7 percent a year earlier. Meanwhile, output by energy-intensive industries such as metals smelting, petrochemicals, coking and steelmaking rose only 2.3 percent, while their electricity use fell 3.7 percent.

China’s manufacturing accounted for 44.1 percent of GDP in the first quarter, down from 46 percent a year earlier, the commentary said.

Similarly, double-digit drops in exports do not mean total economic growth should be negative, it said.

“Both figures are correct,” it said, noting that other countries often see similar trends.

China has long faced severe challenges in ensuring that the data it collects reflect economic reality, partly because local authorities believe their career prospects depend on how their regions perform.

Many economists automatically adjust their analysis to take such variances into account.

The Statistics Bureau acknowledged the problem, noting that new rules that took effect May 1 stipulate penalties for publishing or providing fraudulent statistics.

One of the bureau’s deputy directors, Xu Xianchun, recently issued a commentary noting that monthly retail sales data, which have remained resilient despite a plunge in exports, are not a very good measure of overall consumption.

Government purchases are included in consumer sales figures, while data on spending for education, health care, housing, entertainment and other basic services are excluded, Xu said. The data also exclude the value of consumption by households of their own output, such as farm produce.

“There is a clear difference between the retail sales value and actual household consumption,” Xu wrote.

According to Xu, consumer spending grew less than 10 percent year-on-year in the first quarter, not the 15 percent reported earlier. Relying on those figures to judge growth rates could lead to the “wrong conclusions,” he said.

But the article carried a notice that it reflected Xu’s personal opinion, not that of the bureau.

5/26/2009 12:41 AM ELAINE KURTENBACH AP Business Writer SHANGHAI