Recommended read: Taking a close examination at the myth of Chinese data using provincial 2011 GDP figures as an example.
Indeed, big numbers are bandied about by politicians, traders, financiers and commentators alike, many a time without checking the veracity of the information. With such instantenous information saturation today, perhaps the difficulty nowadays is not in selecting good information, but in sieving out the good stuff from the driftwood.
From Christopher Balding, a professor of business and economics at the HSBC Business School at the Peking University Graduate School.
– – –
The Fairytale of Chinese Data
by Christopher Balding
Source – Baldingsworld.com, published September 14, 2012
During one of my classes I taught at Peking University, I was delivering a lecture that included some data I had downloaded from the Peoples Bank of China (PBOC) website. A student cautiously raised their hand and asked where I had gotten the data. Trying to blend into the Chinese university system, I proudly replied “The Peoples Bank of China website.” The student looked at me sheepishly and asked “Do you believe that data?”. Not wanting to engage in a discussion about the truthfulness of PBOC data during my early days at Peking University, I turned it around and asked “you tell me. Should I?” The student who asked the question shook his head and said no like he was teaching me something everyone already knows and the rest of the class agreed.
Chinese economic data is like surrealist or cubist art: it bears a vague resemblance to the underlying subject but no connection to reality. Let me state this as plainly as possible: official Chinese economic data is science fiction. Manufactured. A figment of some party officials imagination. Bogus. As real as a 10 rmb DVD from a street vendor in Beijing.
It is a regular parlor game among China watchers to point out the number of errors in Chinese data. No less than the US Federal Reserve was the latest to point out that official Chinese data may not be what it claims to be. People have written entire books dedicated to deciphering the absolute mess that is official Chinese data. Earlier this year, Tsinghua University professor and noted China blogger Patrick Chovanec (who you should read if you don’t already) “kick(ed) up a hornets nest” when he said during a Bloomberg interview that “I was finding it harder and harder to reconcile China’s official CPI, GDP, and PMI numbers with what I was seeing and hearing on the ground.” What is more astounding is that these blatantly and obviously manipulated figures would be believed by the financial industry, journalists, academics, and the world at large even when the fraud is so glaring. Look at the latest provincial 2011 GDP figures in the figure below.
China declared an official GDP growth rate of 9.2% for 2011. Interestingly however, only six provinces out of 30 comprising 25% of Chinese population declare GDP growth rates equal to or less than 9.2%. The CNBS must have invented a new type of math to come up with these growth numbers. If GDP was reported based upon population weighted provincial GDP, 2011 Chinese GDP would be 11.8% instead. Do not however make the mistake of believing that the 11.8% number is any more real than the 9.2% number as they both come from the Party’s imagination. The CNBS conjuring the data with a magic wand couldn’t make its own numbers add.