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(Bloomberg) — 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.

Size matters. A larger economy makes China’s debt-to-GDP ratio appear a little less scary. Output per worker, and therefore labor productivity, looks healthier as well. The energy-intensity of GDP improves too. It also means China could be world’s biggest economy two to three years sooner than otherwise, the analysts found.

But it’s not all good news: “It will be harder to wring higher growth out of the structure of today’s more advanced Chinese economy in the years ahead,” authors Daniel H. Rosen and Beibei Bao wrote.

As for Monday’s reading, economists forecast the government will say GDP growth slowed to 6.8 percent in the three months through September from a year earlier. That would be the slowest quarterly pace since 2009.
That isn’t deterring Mobius, who says: “The transition is definitely on its way and is going to be successful.”

To contact the author of this story: Malcolm Scott inHong Kong at mscott23@bloomberg.net To contact the editors responsible for this story: Enda Curran at ecurran8@bloomberg.net Aki Ito at aito16@bloomberg.net