Transactions from Alibaba and UnionPay Used as Traditional Indicators Become Irrelevant

Transactions from Alibaba and UnionPay Used as Traditional Indicators Become IrrelevantData coming from transactions from Alibaba and UnionPay can be use as a gauge to determine the strength of the expanding service and consumption sector as traditional indicators are starting to become irrelevant. UnionPay is handling transactions for almost all of the nation’s bank cards and Alibaba controls the largest online sales platform. An index that is developed by Alibaba is showing consumer prices in August have speed up more than the government’s official reading. Meanwhile Tsinghua-UnionPay Advisors Indices showed that spending in luxury hotels in China increases to a record number in August both contrast with the Caixin Manufacturing Purchasing Managers Index that slid down to 47.2 percent in September.

While traditional growth engines of manufacturing and investment are struggling, the resilient service sector is holding up the overall economy which is other wise would have fallen. But there are various and frequently updated indicators for traditional growth engines and economists are left in the dark on how healthy the service sector is even with the insufficiency of any reliable data. This is one reason why China’s second quarter Gross Domestic Product data have encountered a huge skepticism due to the vast incongruence between it and the sagging industrial production data. Officials are fast to rebuke all outdated fixation on the old engine data as the economy is under going a profound structural change and shifting away from investment and manufacturing to service and consumption.

Another hugely recognized indicator is the non manufacturing Purchasing Managers Index that is released by official and private agencies. But analysts are saying that the PMI is based on surveys of purchasing managers and the samplings of different enterprises are affecting the reading. Such as official and private PMI results are often suggesting different directions in the economy and the former is based on large state firms while the latter focuses in small private firms. Conflicts between the official PMI and private PMI will always be there as the questions remains whether the economy is getting better or worse.

Another used indicator is the Li Keqiang index which is a method that is inspired by the premier’s way of gauging the real economy using factors such as bank loans, electricity production and railway freight volume. Attempts in developing a similar headline indicator in the service sector is still being studied and experts are looking for ways to gauge the service sector the only problem is they lack reliability and high frequency subindexes.

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