Mirroring China's BoP data from the outside

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Chinese economic data is often criticized for painting an overly optimistic and stable picture of economic conditions in the country. One reason is that it tends to be difficult to reconcile apparent contradictions between Chinese data sets. This makes it challenging to understand whether data oddities are due to intentional massaging or more ‘organic’ factors, such as revisions.We find that China’s balance of payments (BoP) data generally lines up with “mirror” data reported by other countries, however. More specifically, China’s goods trade - across both imports, exports, and the trade balance - correlates closely with what China’s major trade partners report their trade with China to be. Services trade and “other investment”, both of which have been viewed as embodying capital flight in the past, also correlate with what partners report. China-reported financial account flows - FDI and portfolio flows - correlate a bit less well with the mirror data, though there is still a clear relationship. We find the moderately high correlation for the financial account surprising, as many of these flows go through financial centers and are therefore not observable.The general correspondence between the data reported by China and its partners provides some nuance to the prevailing narrative that “Chinese data is bad”. A more humble interpretation of our analysis is that, while it doesn’t mean we can reject the idea that Chinese economic data is bad, it certainly doesn’t support it, either. Our working theory is that some Chinese economic data is indeed politically sensitive, but tha…