China | Corporate

New ‘China Beige Book’ Sees Growth Rebounding

By Prabha Natarajan | The Wall Street Journal | August 14, 2012 | 3 pages

A private research firm has taken a leaf out of the Federal Reserve’s book by creating a “Beige Book” for China.

The quarterly report, similar to the Fed’s snapshots of U.S. regional conditions (which come out eight times a year), is an effort to provide foreign investors with a better understanding of the economic workings of China. The report drills down to sectors, and to China’s eight regions, including Tibet. It doesn’t focus on broad macroeconomic data like GDP or manufacturing.

“The data helps investors understand the evolving dynamics on the ground in China,” said Leland Miller, president of CBB International, the publisher of China Beige Book.

While working independently of the Fed, the firm relies on the U.S. central bank’s methodology and questionnaires for its research. When it comes to China, people are worried about the quality of the data, their comprehensiveness and ability to span the country’s diverse and complex industries, said Craig Charney, director of research at CBB International.

“It’s hard to ensure the quality of data,” Mr. Charney said, but he relies on extensive pretesting and surveys to ensure clean readings.

In its second China Beige Book released last month to clients, the report noted there were signs of a rebound largely fueled by increased retail sales, but problems continue to persist in industries like mining and minerals. While metro regions continued to see the strongest surges in retail spending, there were also sizeable spending increases in the central and northern regions, Mr. Charney said.

There are also signs of government stimulus in addition to monetary easing throughout the economy, he said. For instance, state-owned firms are investing in mining and transportation. There also are policies geared to boost consumer spending, including purchases of homes and cars. Consumer spending and services are picking up the slack in exports and some manufacturing sectors, according to the report.

“The data is fresh and we put it out so fast that it will serve as an early indicator of what is coming in official data later,” Mr. Miller said.