A new “Li Keqiang Index” to destroy Australia

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From the WSJ:

Numerous banks and brokerage houses have since created versions of what’s known asthe Keqiang or Li Keqiang index. While their underlying components vary – some add passenger traffic or floor space under construction, for example – most suggest growth in the world’s second-largest economy is closer to 5% these days than the official 7% figure.

Last week, China’s State Council, the nation’s cabinet, suggested in an online post that it was time for a new Keqiang index.The new measure should be focused on employment, personal income and environmental improvement to better reflect Beijing’s growing focus on innovation and quality of life, said the post, which cited stories by China Business News and the Economist.

The State Council has a point. Most Keqiang indices focus on old economic drivers like manufacturing, transportation and lending despite the growing role services and consumption are playing in the economy. Services accounted for 48% of gross domestic product in 2014, compared with 41% for manufacturing, while consumption last year was 51% of GDP, up from 49% in 2011. In China, consumption includes government spending.

That’ll be a nice fig leaf to cover the great Australian bust.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.