Chinese Business Cycles Identified by Coincident Indexes
Wang Hongju 1 and Zhang Huilian 2
1 Institute of Economics, Chinese Academy of Social Sciences, Beijing, China
2 School of International Economics, China Foreign Affairs University, Beijing
Abstract: In reference to the method of the Conference Board, the coincident indexes for China are constructed from a sample period between January 1990 and May 2012 and by 51 chosen component indicators. The resulting coincident indexes have higher correlations with gross domestic product (GDP) growth rates than the China Economic Monitoring and Analysis Center (CEMAC) coincident index over the sample period between February 2005 and May 2012. The peaks and troughs of the growth rates in several indicators are identified. The total number of peaks and troughs in the resulting coincident index is the same with the CEMAC coincident index. Unfortunately, these troughs don’t signify recessions in the Chinese economy because the financial system has not seen a negative growth rate over the specific sample periods. The impacts of the Southeast Asian Financial Crisis and subprime mortgage crisis on the business cycle could be dated via a smoother index from HP filtering to the coincident index.
Keywords: coincident index, business cycle, Bry-Boschan algorithm