Tom Holland (in the South China Morning Post – SCMP) discusses the utility of using mainland electricity consumption data as a proxy for electricity consumption.
He makes an interesting and valid point that certain industries are very electricity intensive (smelting – especially aluminum). Holland reports that over the previous months smelting has increased, as has the mainland’s electricity consumption (+4.7% yoy in July). He argues that the growth figure is distorted.
In a previous post I discussed the merit of electricity consumption as a lead indicator of China’s GDP growth, especially considering the nature of other data points. Accounting for Holland’s comments, I would temper my additional enthusiasm. Nonetheless, I still maintain that its a good lead indicator of a direction at least, and as I said last time, it is important to drill down and understand the components of the electricity data point.