[Other unusual indexes have enjoyed varying
degrees of success. For understanding exchange rates, there’s The Economist’s
Big Mac Index. The Lipstick Index is considered an inverse indicator — when
times are bad, goes the thinking, women spend money on lipstick rather than more
expensive purchases like clothing or shoes. Similarly, the High Heels Index is
supposed to predict downturns. (Women turn to heels as a means of escape when
things are bad, or so the idea goes.)]
By Alexandra Stevenson and Cao
Li
 |
|
Workers
checking steel bars at a factory in Liaoning, a rust-belt province that has
posted
some of China’s worst economic results. Credit China Network/Reuters
|
By almost any measure, China’s economy is
slowing. Consumers are cautious. Apartments are sitting unsold. Industrial
profits are falling, too.
But China’s state media wants people to look
at another indicator: men’s underwear.
Sales of boxers and briefs are surging in
Liaoning Province, according to The Global Times, a fervently nationalist
tabloid controlled by the Communist Party, bringing a bit of good news to a
down-and-out part of China’s rust belt that epitomizes many of the country’s
economic problems. Cheered by the prospect of a brighter future, the article
argued, Liaoning men are upgrading a part of their wardrobe that most of their
friends and family will never see.
In highlighting such an unorthodox economic
indicator, The Global Times is harking back to a long tradition of eclectic
economic indicators, one that the general public and even some economists like
to turn to when the usual yardsticks of the dismal science just won’t do.
But in the case of the Liaoning Underwear
Index, economists are — to put it lightly — skeptical.
“The only relevant context here,” said Arthur
Kroeber, managing director of Gavekal Dragonomics, a research firm, “is that
China’s economy is slowing markedly and official media have been ordered to
smear the pig with lipstick.”
The drive to find a measure that shows
prosperity in one corner of China is perhaps understandable. Chinese leaders
are contending with a steady flow of disappointing economic data that has
affected confidence among consumers and investors; the country’s stock market
has lost a quarter of its value this year. All the while, Xi Jinping, China’s
top leader, is navigating a protracted trade war with the United States that,
if it intensifies, could make the problem even worse.
Chinese officials have taken steps to
insulate the public from the bad news, including censoring local media, while
pledging to cut taxes and make other moves to cheer up businesses.
The Global Times didn’t invent the Underwear
Index. Once championed by Alan Greenspan, the former chairman of the United
States Federal Reserve, the Underwear Index was used by American media during
the depths of the global financial crisis as a shorthand for a recovering
economy. (The Underwear Index missed the recovery by about a year.)
Other unusual indexes have enjoyed varying
degrees of success. For understanding exchange rates, there’s The Economist’s
Big Mac Index. The Lipstick Index is considered an inverse indicator — when
times are bad, goes the thinking, women spend money on lipstick rather than more
expensive purchases like clothing or shoes. Similarly, the High Heels Index is
supposed to predict downturns. (Women turn to heels as a means of escape when
things are bad, or so the idea goes.)
In China, informal indicators have had an
even greater appeal because of a general mistrust of official statistics.
There’s the Pickle Index, which is used to measure the rate of China’s
urbanization. (Migrant laborers like eating pickles, the thinking goes, so when
sales are up in a city or region it suggests more laborers have arrived.) Some
also track sales of instant noodles, a cheap meal when takeout is too costly.
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Liaoning itself provides a handy example.
Just one year ago, Chinese officials said Liaoning had padded its growth
statistics between 2011 and 2014. Even before that, it gave birth to one of
China’s most closely watched unofficial economic gauges: the Li Keqiang Index.
Named after China’s current premier, the Li
Keqiang Index got its start when Mr. Li was the top Communist Party official in
the province. In 2007, when Mr. Li was party secretary of Liaoning, he told the
United States ambassador to China that official figures were “man-made” and
that he preferred to track the province’s economic trends through the
province’s railway freight volume, electricity consumption and bank loans.
While the Li Keqiang Index has some grounding
in economic nuts and bolts, the Liaoning Underwear Index was greeted by
economists with a hefty dose of caution.
The Global Times cited data from the research
arm of the online retailer JD.com, saying that men’s underwear sales had jumped
42 percent in 2017 and 32 percent so far this year. The rate of increase in
underwear sales in Liaoning is greater than in any other province, The Global
Times wrote. But when asked whether JD.com had comparable figures for other
provinces, Ling Cao, a spokeswoman for the company, said, “We don’t have figures
from other provinces.”
The JD.com figures are also online only,
meaning they don’t include underwear sales in brick-and-mortar stores.
Global Times staff members didn’t respond to
calls and an email for comment.
Here’s the thing: Even if its methodology is
uncertain, the Liaoning Underwear Index may be coincidentally right.
The province’s figures for industrial
profits, production and consumption have been on the rise, experts say. Much of
that growth may come from Chinese efforts to rekindle the economy, as it turns
away from efforts to cut debt and begins approving the sort of big-cement,
big-iron building and infrastructure programs that fueled so much of its growth
after the global financial crisis of 2008.
“On the face of it, the Liaoning branch of
the National Bureau of Statistics has reported some decent economic numbers for
the past few months,” said Victor Shih, an associate professor at the
University of California, San Diego.
However, that improvement is coming from a
low base. Most recently, the province posted some of the worst economic numbers
in the country.
“Having said that,” Mr. Shih added, “this is
happening after a couple of years of dismal economic performance.”
There’s another possibility, he said.
Underwear, being soft and eminently foldable, can be easily shipped from one
corner of China to the next. So it will go where there are customers.
Perhaps, goes this thinking, Liaoning men are
returning home because they can’t find work in any other province. And they
have to wear something.
