Let’s be brief: Underwear sales aren’t a rational way to measure China’s economic performance

By Hu Weijia Source:Global Times Published: 2018/12/27 21:48:39

As 2018 draws to close, anyone who's concerned about global growth next year is paying close attention to the Chinese economy. In some cases, that means focusing on men's underwear.

A widely circulated post claimed that a rise in the sale of men's underwear in Northeast China's Liaoning Province signals an economic recovery in the long-lagging province.

Once a famed industrial base, Northeast China is undergoing a painful economic transition. Officials have announced plans to revitalize the region through reforms. Does a rise in sales of men's underwear raise the prospects of an economic recovery?

The Men's Underwear Index (MUI), which claims that upswings in sales predict an improving economy, was long favored by former US Federal Reserve chairman Alan Greenspan. The MUI may be a barometer of the US economy, but it's perhaps not very adaptable to China.

Sales of men's underwear in Liaoning Province rose 32 percent year-on-year in 2018, a report by local news website syd.com said, citing figures released by the JD Big Data Research Institute. Research from the institution is largely based on retail sales figures from platforms under Chinese e-commerce giant JD. With such fragmentary readings, we cannot rule out the possibility that the sales upswing is only the result of a shift toward online shopping.

Chinese and American consumers have very different spending habits, so it doesn't make sense to say that rising sales of men's underwear mean anything in China, just because the MUI works in the US. Some Chinese netizens said sales have risen in Liaoning because the weather this winter is more variable and humid, so people need to buy more underwear.

We cannot be overly optimistic about an economic recovery in Liaoning and more stimulus policies are still needed. With 5.6 percent GDP growth in the first half of 2018 and 5.4 percent growth in the third quarter, the province continued to underperform the national economy. It's unlikely that the province will revive next year and serve as an engine for the national economy. As China's economy has matured, its real GDP growth rate has slowed significantly. In 2019, economic expansion is likely to further decelerate. Stimulus measures should be planned to ensure economic stability amid the trade conflict with the US.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn


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