Perspective Analyst: Local Analysts Will Be Able To Better Than Foreign Analysts Forecast Macroeconomic Outlook

This thesis examines whether analysts based in Mainland China more accurately forecast Chinese key economic variables, compared to those based abroad and in Hong Kong. It also looks at whether expatriate forecasters outperform local firms in Mainland China and Hong Kong. Using a sample of 29 different banks, firms and institutions forecasting Chinese key macroeconomic variables, this paper finds that the expatriate firms based on Mainland China have the most precise forecasts, followed by the homegrown Chinese companies. Looking at the firms based in Hong Kong, expatriate firms outperform the local firms also here, but are less accurate than the Mainland-based. The least precise forecasters were those based abroad. There is a clear local advantage when forecasting future economic variables. The paper also finds that there is no relationship between the size of a company and precision of its forecasts in China.