Waiting for Release of the Data—or Not
The regular monthly calendar is a way to keep track of what data is released when. But in China, not everyone is waiting for the official release to see the data. Economic data and information on key policy decisions are often in the market days ahead of the official announcement. If the markets latch on to a credible rumor for an important data point, the reaction can happen ahead of the official release. Important information leaks into the markets in several ways:
- Officials in the know share information with family and friends, enabling them to make a profit before it is made public. In June 2005, weeks before the government announced the end of the yuan's peg to the dollar and a one-off 2% appreciation, insiders were turning up at banks with briefcases full of dollars to change into yuan, planning to make a fast buck when the government removed the peg. In most months in 2010, the CPI data was in the market, correct to one decimal place, days ahead of the data release. Investors with strong links to official sources saw the data first and were able to take a profitable position based on their information advantage.
- Senior officials sometimes abandon protocol and announce the data before the official release date. Premier Wen Jiabao is a repeat offender. In March 2010, he told a group of foreign business leaders that China expected a trade deficit for the month some weeks ahead of the official data from the Customs Bureau. In March 2009, he was so excited by a rebound in industrial value added that he announced it himself before the NBS had a chance.
- Official information can be collected from unofficial sources ahead of the data release. Data on bank lending never used to be particularly important. The banks could be counted on to lend CNY200 billion or so a month, higher in the beginning of the year and lower in the end, but not normally with enough variation to move markets. In 2009, that all went out the window. A surge in bank lending was the major factor contributing to the recovery in the real economy and the rebound in the equity markets. With investors focused on the lending figure, the financial press has started to work contacts with the banks to get an advance estimate. Industrial and Commercial Bank of China, Bank of China, China Construction Bank, and Agricultural Bank of China account for around half of total lending. For a journalist with good contacts, four phone calls can produce a reasonable estimate of lending for the month. That number is normally in the markets ahead of the PBOC data release.
- The monthly data on industrial value added, fixed asset investment, retail sales, CPI and PPI, and the quarterly GDP data is announced to the financial press about 15 minutes ahead of the public announcement. In theory, this allows the data to be released to the markets in an orderly way. Any organizations that take advantage of the 15-minute window to jump the gun and release the data early should be severely punished. In practice, Chinese news organizations, especially state media outlet Xinhua, break the embargo with impunity. Foreign news organizations, which are kept on a tighter leash, are left fuming as their Chinese competitors break the rules to gain a competitive advantage.
It adds up to a messy and confusing picture, with insiders benefiting from advance information and everyone else chasing rumors. For foreign investors, the chance of being out of the loop when decisions or data are leaked is one of the frustrations of working in the Chinese markets.