China’s better-than-expected GDP growth in the second quarter of this year has aroused suspicion as analysts point out it does not reflect the country’s real economic situation.

The Chinese economy expanded 7 per cent between April and June compared with the same period last year, buoyed by robust growth in the services sector, according to statistics released by the National Bureau of Statistics on Wednesday.

Francis Cheung, brokerage firm CLSA’s chief China and Hong Kong strategist, called the 7 per cent figure “misleading.”

“The strong GDP growth is misleading as it is mainly driven by weak imports, which boosted net export contribution.” Cheung said in an analysis report.

Economists surveyed by the Wall Street Journal had expected growth of 6.8 per cent.

The Chinese government forecasted a yearly GDP growth of 7.4 per cent. But this was revised to “about 7 per cent” in March during the annual convention of the national legislature, according to a report by state news agency Xinhua.

The Economist pointed out Chinese economic statistics are not always trustworthy. The country’s incumbent premier Li Keqiang once told an American diplomat that local GDP data were “man-made and therefore unreliable” when he was party chief of northeastern China’s Liaoning Province, according to classified documents released by Wikileaks.

The Economist said the GDP deflator, a measure of price levels with respect to a base year, may have been undervalued.

A spokesman for the National Bureau of Statistics Sheng Laiyun denied the allegation.

Spokesman for the National Statistics Bureau Sheng Laiyun.

“There’s no such kind of situation in China that the GDP deflator is underestimated or the GDP is overestimated,” Sheng said, “(our data) can reflect the situation objectively and realistically.”

Sheng said the “misunderstanding” is due to different methods China and other countries use to calculate GDP. Western countries usually use the expenditure approach, which adds up domestic consumption, business spending and net exports, Sheng said.

But China uses the production method, which is based on the gross value of domestic output in various sectors, Sheng said.

Chinese stock markets were unimpressed by the strong GDP growth on Wednesday. The Shanghai Composite Index went down 3.03% while the tech-heavy Shenzhen Composite Index shed 4.22%. Both markets recovered some lost ground in morning trading today.

Vivienne Zeng

Vivienne Zeng is a journalist from China with three years' experience covering Hong Kong and mainland affairs. She has an MA in journalism from the University of Hong Kong. Her work has been featured on outlets such as Al Jazeera+ and MSNBC.