With China set to announce its third-quarter gross domestic product report on Monday, skepticism over its economic data is arising anew.

Recall that Bill Gross has described China as "the mystery meat of emerging-market countries." Premier Li Keqiang, before taking that post, said he didn't rely on official statistics. He preferred things like rail freight and electricity use to gauge activity.

So is China about to puff up its economic report card once more?

Quite the contrary, according to one of the world's foremost emerging market investors, Mark Mobius.  

"I know there's a lot of debate as to whether the numbers are true, whether it's really 7 percent, but our numbers indicate that it is at least that," the chairman of the emerging-markets group at Franklin Templeton Investments  said in a recent interview with Bloomberg TV. "We think that a lot of the economy is not really being counted because China is being converted from a manufacturing-oriented economy to a service economy." 

That gels with the view of Rhodium Group analysts in a September report for the Center for Strategic and International Studies.

Their 200-plus page study found China's GDP methodologies are largely in line with international practices and charges that estimates are sheer fabrications are "misinformed." Still, they acknowledged that Chinese statistics and their transparency are "sometimes shaped by political interests."

China's economy is bigger, not smaller than official data suggests, the analysts found, with the services sector the hardest to measure and real estate even more important than currently reflected.

David Fuller's view

China is not a market suitable for every investor’s temperament.  It can be extremely volatile, not least as command capitalism produces some impressively efficient winners but also frequently stumbles.  Additionally, a superpower led by a communist government is not exactly reassuring for those of us living in democracies.  Nevertheless, we also know that China’s best exports have long been its hardworking people and 1.3bn of them remain in their home country.

The dust has mostly settled following China’s ham-fisted stock market interventions which I have discussed on numerous occasions.  Valuations are lower for mainland China’s A-Shares (p/e 16.85 & yield 1.83%) and Hong Kong’s HSI (p/e 9.85 & yield 3.71%) and HSCEI (p/e 7.49% & yield 3.72).  The charts continue to look like recovery candidates.