Does Baghdad Bob Have a Cousin in Beijing? (Updated)

Jamil Anderlini, writing in the Financial Times has an interesting if unsurprising column today, wondering if the always-rosy official statistics on Chinese economic growth aren’t departing from reality with even greater determination than usual:

China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery.

But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.

GDP totalled Rmb15,376bn ($2,251bn) in the first half, according to data released individually by China’s 31 provinces and municipalities, 10 per cent higher than the official first-half GDP figure of Rmb13,986bn published by the National Bureau of Statistics.

All but seven of the regions reported GDP growth rates above the bureau’s first-half figure of 7.1 per cent. At the start of the year, Beijing set 8 per cent as China’s growth target for the year.

It probably doesn’t help that ordinary Chinese people find their government’s figures ludicrous:

The Global Times, controlled by the People’s Daily, the Communist party mouthpiece, reported that the public reacted with “banter and sarcasm” to NBS figures showing average urban wages in China rose 13 per cent in the first half to $2,142.

It quoted an online poll showing 88 per cent of respondents doubted the official numbers.

An editorial on Tuesday in the China Daily, the government’s English-language mouthpiece, quoted another survey that found 91 per cent of respondents sceptical of official data, up from 79 per cent in 2007.

The government has responded by producing a publicity campaign. Among the works of the campaign is a song, I’m proud to be a brick in the statistical building of the republic. Everybody sing!

I can almost hear the heads of readers at OTB hitting their desks as they fall into a confused slumber at this news. Let me suggest some reasons that China’s actual level of growth is important to us:

  1. The slower China’s growth, the less their inclination to buy our debt, which at the margins will increase the interest we’ll need to pay on future debt.
  2. The slower China’s growth, the greater their inclination to sell off some of the Treasury bonds they’ve got to fund their own stimulus package (which, interestingly, the Chinese are using to buy flatscreen TV’s. But I digress), which at the margins will increase the interest we’ll need to pay on future debt.
  3. The slower China’s growth, the greater the degree of civil unrest in the country. That’s not good news for anybody.
  4. Goldman-Sachs is still touting its China portfolio strategy.

From Seeking Alpha:

Sometimes “professional” investment research resembles little more than a day trader rag with nicer charts and fancier wording to make the reader feel less guilty and more professional about the kind of “investing” he or she is actually performing. Thus we point to Goldman’s (GS) recent China “Portfolio Strategy” dated July 31st where they tell us to basically keep buying the Chinese market based on government support for the economy and a “favorable liquidity setup”. We’re told to buy on dips, “stay engaged” (i.e. keep generating commissions), and trade earnings surprises. Is this professional investing or what your college roommate was doing during the dotcom bubble? It’s hard to tell the difference.

Is GS selling something that they know is riskier than they’re claiming? Now where have I heard that before?

UPDATE

On a related note Victor Shih observes that electrical usage by small and medium enterprises in China dropped by a jaw-dropping 50% during the first half of 2009 compared to the same period last year.

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Dave Schuler
About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging. He has contributed to OTB since November 2006 but mostly writes at his own blog, The Glittering Eye, which he started in March 2004.

Comments

  1. Drew says:

    “The government has responded by producing a publicity campaign. Among the works of the campaign is a song, I’m proud to be a brick in the statistical building of the republic. Everybody sing!”

    Sounds like an Administration/MSNBC campaign…….

  2. Matthew Stinson says:

    Funny you’d post this now. I know a Chinese journalist who told me earlier in the week that she hates reporting statistics because she can’t trust the government’s numbers. Shih’s data point blows some of these stats clear out of the water.