More on China’s Faux GDP Data

Back in October, I laughed off the latest China GDP data as utterly fabricated.As it turns out, I was not the only one. China expert Gordon G. Chang (author of The Coming Collapse of China) is more than skeptical — he has the data to question much of China’s growth miracle.

Spoiler alert: Its been wildly exaggerated:

“Beijing, in the 1990s, ordered factories to churn out goods in periods of low demand, and there are indications that officials are resorting to this tactic now. While optimistic analysts point to astounding car sales–up 70.5% in July, 94.7% in August and 83.6% in September–there are reports that central government officials have ordered state enterprises to buy fleets of vehicles and that these businesses are storing them in parking lots across the country. These stories are as yet unconfirmed, but they are consistent with statistics showing that gasoline sales have been flat this year–up only 6.4% in August, for instance, and sliding since then from all indications. So here’s another question: At a time when economic activity is supposedly rising at a quick pace, how can large increases in passenger vehicle sales not be accompanied by corresponding surges in fuel usage? (emhasis added)

The answer is that Beijing’s statisticians have gone back to their old tactic of making up figures to support the Politburo’s predictions. The Chinese economy is probably growing due to state-led investment, but it cannot be doing so at the rates claimed. Wen Jiabao’s stimulus plan is, above all, grossly inefficient. For all the money he is pouring into the economy, the country is getting a small return in economic output. That’s why Premier Wen, despite the high growth numbers he’s been reporting, consistently refuses to end his stimulus program. If his numbers were real, he would be worried about overheating. But he’s apparently not.”

Gee, whoever would have guessed that a Totalitarian government would lie in its official data?

Previously: Who Believes China’s ‘Bernie Madoff’ Data? (October 22nd, 2009) http://www.ritholtz.com/blog/2009/10/who-believes-chinas-bernie-madoff-data/

Source: China’s 8.9% Growth? No Way Gordon G. Chang Forbes, 10.23.09 http://www.forbes.com/2009/10/22/china-growth-gdp-economy-opinions-columnists-gordon-g-chang.html


Originally published at The Big Picture and reproduced here with the author’s permission.
 
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3 Responses to "More on China’s Faux GDP Data"

  1. Guest   November 20, 2009 at 2:46 pm

    The answer is that China’s fleet largely runs on diesel fuel, the sales of which are up pretty sharply since the beginning of the year, according to RGE’s “China’s New Fuel Price Mechanism: Supporting Refiners?”

  2. djvu   November 28, 2009 at 4:04 am

    well according to Jim Chanos” China is Dubai a 1000 times over , if not a million”

  3. wuliang   November 29, 2009 at 10:07 pm

    I’m Living in China. If somebody says China government is ordering state-owned companies to buy a fleet of cars and put them only in the parking lot, that means his understanding about China is too little. These thing never happen in China. That is just his wild guess. It is true that China has a big property bubble driven by loose bank loans and improper tax policy. But the car sales is real.