Are you an optimist or a pessimist? Is your glass half empty, or half full? The answers to those sorts of personality questions probably shape how you think of the current business climate index (BCI) numbers just released in China.

I haven't paid much attention to China's BCI before now. It strikes me as something like trying to take the temperature of a small fire. China's economy is hot. Do fluctuations in the index really tell you anything...?

Yesterday China's National Bureau of Statistics released numbers for the second quarter of this year. The numbers are up, if you want them to be. China View is reporting that they the BCI rose 1.2 points in Q2, to 137.4 (from 136.2 for the first three months of the year). Manufacturing carried the index into positive territory with a 2.4 point increase. Real estate was unchanged and other sectors of the economy declined slightly.

I liked this little understatement in the China View report: "The index, ranging from zero to 200, represents positive or improving business conditions when it is above 100. "

Not happy with that assessment? Okay, then the BCI is actually down for you. How?


© jurvetson

Last year the BCI was at 146 for Q2, according to the China Daily. At the current 137.4 the index is down by over eight points, year on year. So take your pick...

It reminds me of the story about the child psychologist who was researching personality development. He had two young boys as subjects - one who was always high-spirited and one who always seemed to be whining and crying. The psychologist took the whiny boy into a room where there was a brand new pony all saddled up and told the boy he could have the pony. The boy began to cry. When the psychologist asked why, the boy said that ponies could be a lot of trouble and work. Who would feed it and groom it? Who would take it out for exercise in the winter? The boy concluded by saying that it wold probably get sick and die, anyway.

Then the psychologist took the high-spirited child into a room where there was a huge pile of horse manure. The child squealed with delight and ran and jumped into the pile of dung. He romped in it and dug like he was looking for something. When the psychologist asked him to explain his behavior and his delight the boy said, "With all this horse crap here there must be a pony somewhere..."

So I guess it's all in how you look at it. And anytime we talk about economics, there's a certain amount of crap in the room...