by Tyler Cowen
on November 14, 2008 at 8:22 am
in Data Source
Electrical power generated in October is 4% below a year earlier.
Is there any chance that this is more reliable information than the gdp statistics offered up by the Chinese government?
Passenger traffic on Chinese airlines is down substantially year-over-year as well. (There have been schedule reductions, too, but the decline in service is not as large as the decline in traffic.) It’s partially Olympics-related, but I doubt that’s the whole story.
China Eastern (Shanghai-based)
Revenue Passenger Miles (RPM): -13.4%
Available Seat Miles (ASM): -8.7%
Air China (Beijing-based)
China Southern (Guangzhou-based)
Freight is down too (tonne-kilometers):
China Eastern: -21.5%
Air China: -14.3%
China Southern: -15.2%
As you would imagine, they’re also losing lots and lots of money.
A quick explanation:
The two measures used above(RPM and ASM) are common measures of passenger traffic and offered capacity, respectively, for the three biggest mainland airlines. These figures are year-over-year changes based on September traffic.
1 RPM represents one paying passenger flown 1 mile.
1 ASM represents one seat (full or empty) flown 1 mile.
So a 100 seat plane flying Boston-La Guardia (184 miles) that is half full generates 9,225 RPMs and 18,449 ASMs.
Could be more efficient use. What about the effect of the Olympic games being over?
I suspect a combination of slowed growth and increased efficiency, and possibly more accurate reporting. With the oil price spike, their manufacturers would be looking for ways to save money by using energy (and anything else) more efficiently.
Yes. Energy use is probably a better proxy for productivity than our calculations of GDP. But there’s also the factor of efficiency, how well the energy is used.
Think principles of ergonomics. Everything can be reduced to energy and time. Price is determined on the supply side by time and effort consumed and on the demand side by time and energy saved.
I’ve been tracking our gasline use, price, and vehicle miles travelled. The news over the past several years is not good. Counter-intuitively, we’re in a state where price increases lead to declining efficiency as well as declining consumption. Not good at all for economic productivity. Prices are back down, but I think the damage is done.
Quantity is determined simultaneously with price.
The supply of electricity at a given price has probably declined because it is generated using fossil fuels.
Thus quantity should be expected to decline, even if demand were held constant.
Another factor–electricity consumption is probably a superior good in the Chinese economy, so the income elasticity of demand is greater than one.
Some people have made this kind of comment several years ago, even in academic papers, saying that Chinese economy didn’t grow at all in recent years, if you look at the energy use. Really? Can’t you just go to China and take a look at how Chinese people are living, how the streets are like? The economy didn’t grow these years? Shouldn’t the Chinese citizenry rebelled long time ago if that’s true?
And looking at airline passenger traffic alone is silly. You need to look at the entire passenger traffic. China has built lots of railways and upgraded losts of trains these years. Travel by train in many parts of China is a very comfortable choice now.
Alone, sure. In combination with other data, still interesting. Remember that not all rail traffic competes with air traffic. (Also, traffic figures are weighted towards international traffic b/c figures are partially dependent on aircraft size and flight length.)
But here are Y/Y comparisons from last year:
Oct 06-Oct 07, China Eastern +14%, Air China +7%, China Southern +15% (RPMs).
Unless all those railways were completed in the last year… (I would have put rail traffic data here but I couldn’t find anything that wasn’t a projection from last year — 1.3bn 2007 to 1.4bn in 2008. If you have data on train travel in China I’d love to see it.)
Looking forward, we shall not place too much attention to this month to month fluctuations as indicator to China’s economic health.
If we suppose that our disaster of the last couple of months was unexpected in china, and that it will have big effects there, then the last few months are all the data we have. Extremely noisy data, censored by the chinese government. How to interpret it?
The most important task for the central government now is to stimulate internal demand to offset the slowing America and Europe economy.
That’s a plausible task.
I’ve wondered whether they might try something more ambitious. Suppose they take dollars at a price nobody else is willing to. Then they could collect a whole lot of dollars, in exchange for a whole lot of renminbi. Would you rather have dollars or renminbi?
And then as they let the dollar:renminbi rate drop, maybe the renminbi becomes the reserve currency? It can be argued that china’s economy isn’t big enough to support a reserve currency, but it could grow into that. And given a choice between a reserve currency managed by the USA versus one managed by a people with a growing economy who might be responsible, what would the world choose?
By taking on our debt china would be giving the world the right to buy more stuff from china. Somehow that doesn’t look like a problem for china right now.
And becoming the main US creditor would go a long way toward resolving the rankling military threats we made against them a few years ago.
Are there objective reasons that would prevent them from doing this?
MM, I get the impression you and I might be in alternate realities. The USA did an exercise with five nuclear carrier groups off the china coast. Where are the china carrier exercises?
How can it be sensible for the US dollar to be a reserve currency when it is so unstable and likely to suffer further devaluation and inflation?
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