Why does China have two sets of PMIs and why are both valuable?

The two PMIs are very different. If you don't know this, the following will set you up for next year!

The PMIs (Purchasing Managers' Index) from China's National Bureau of Statistics (NBS) and Caixin / S&P Global differ mainly in field of study, methodology, and focus. Here's a breakdown of the main differences:

1. Supplier and Affiliation

• NBS PMI:

  • Compiled by the National Bureau of Statistics of Chinaa government agency.
  • Seen as the Official PMIaccording to government policies and priorities.

• Caixin/S&P Global PMI:

  • Compiled by Caixin Media in collaboration with Global S&P.
  • A private sector index, often considered more market based.

2. Scope of Study

• NBS PMI:

  • Focusing on it large and state-owned enterprises.
  • Covers a wider range of industries, including manufacturing and non-manufacturing sectors (eg, construction and services).
  • Reflects conditions in sectors that are heavily influenced by government policies and infrastructure spending.

• Caixin PMI:

  • Focusing on it small and medium enterprises (SMEs)especially in the private sector.
  • Captures the performance of firms that are more exposed to market-driven forces and less influenced by state interventions.

3. Sample size and shape

• NBS PMI:

  • Larger sample size, with approx 3,000 enterprises analyzed for manufacturing PMI.
  • Emphasizes state-owned enterprises and larger companies, which tend to dominate traditional industries.

• Caixin PMI:

  • Smaller sample size, survey around 500 campaignswith a stronger focus on export-oriented and technology-driven companies.
  • Provides insights into the private sector and how it responds to global economic conditions.

4. Release Dates

• NBS PMI:

  • Published monthly, usually on the last day of the month.
  • Provides individual PMIs for manufacturing and non-manufacturing sectors.

• Caixin PMI:

  • Published a few days later, usually on the first business day of the following month.
  • Including only the manufacturing PMI and PMI servicesno equivalent for non-manufacturing activities such as construction.

5. Definition and Application

• NBS PMI:

  • Reflects the economic landscape in general, particularly trends in businesses influenced by government policy.
  • Analysts use it to measure the impact of fiscal and monetary policies on the wider economy.

• Caixin PMI:

  • Seen as a better indicator of the health of the private sector and market-driven sectors of the economy.
  • Considered more sensitive to external shocks (eg, global trade conditions).

6. Key Insights and Differences in Results

• The NBS PMI often appear policy-driven sustainabilityshows less volatility as it covers sectors protected by government support.
• The Caixin PMI there may be more volatileas SMEs are more sensitive to real-time changes in market demand, supply chain disruptions, and global economic trends.

Why both are important:

• NBS PMI offers a macroeconomic view of China's state-dominated economy.
• Caixin PMI provides a micro-economic view of the more market-driven and competitive sectors globally.

By analyzing both, investors and policymakers can get a more complete picture of China's economic health and its underlying dynamics.