What's new

Best way to approach China's GDP figures: Ignore them!

AADHAAR

FULL MEMBER
Joined
Aug 27, 2011
Messages
1,494
Reaction score
0

Best way to approach China's GDP figures: Ignore them!


Here's the best way to approach China's gross domestic product figures: ignore them. Things in the world's second-biggest economy are much worse than they appear.

Even if we take the 7.5 percent April-June growth rate at face value, its components suggest a more ominous scenario. Industrial production, for example, rose just 8.9 percent in June compared with May's 9.2 percent gain. For an export-addicted, developing economy, those are anemic increases. It doesn’t take a vivid imagination to see how that will crimp consumption and income growth in the second half of 2013.

But what's really at issue here is an unhealthy obsession with GDP numbers that tell us very little. What difference does it make if Beijing says it's growing 7.7 percent or 7.5 percent or 7 percent? China's level of output at the moment is certainly lower than any of these numbers. Just ask the factory-floor workers, steel-mill managers or electricity providers who are coping with the realities of fast-slowing Chinese demand.

Even in the best of times, China’s data can be about as accurate as tossing a dart at a chart on the wall. It's a structurally imbalanced economy distorted by top-down policies and considerable ``gray activities'' that are hard to measure, not least of which is the sprawling shadow-banking sector on which the central bank has been clamping down. There also are daunting scale issues. With modest resources, Chinese officials sitting in a room need to condense and capture the activities of almost 1.4 billion people at many levels of poverty, prosperity and urbanization over three months or 365 days. Then, they are expected to come up with a single figure that news agencies can headline and traders can react to.

On top of the many moving parts, statistical margins of error and incentives for fudging and manipulating data, consider how stage-managed Chinese data are becoming. Finance Minister Lou Jiwei told reporters in Washington last week that he expected growth to slow to 7 percent this year, below the official target of 7.5 percent. State-run media quickly whitewashed the record, updating stories to show that he had, in fact, said 7.5 percent.

What markets should be focusing on is the herculean task Premier Li Keqiang faces in improving the quality of growth and weaning China off its addictions to exports and overinvestment. Investors should be concerned by the bad-debt crisis festering out in the provinces, and the risks of social instability as growth wanes.

``Analysts, it seems to me, are assuming that China can start with a clean state and grow at a slower but healthier rate once it corrects its mistakes,'' Michael Pettis, a finance professor at Peking University, wrote in a July 10 report. ``All that piled up debt is simply ignored.''

China Exports Trouble

It's also worth considering how destabilizing China's downshift could be from Tokyo to Washington. Sliding Chinese growth is dismal news for Prime Minister Shinzo Abe's drive to end Japan's deflation. Abe had hoped to harness a big win for his party in Sunday's Upper House elections to implement structural reforms. That becomes more complicated as economic headwinds from across the East China Sea intensify.

The White House won't be happy either to see the world's only major growth engine sputter. After finally responding to U.S. calls to let the yuan rise, China may feel compelled to devalue its currency anew, enraging U.S. lawmakers.

The great Chinese slowdown bulls claimed would never happen is unfolding before our eyes. Obsessing about every little 0.2 percentage point GDP difference in output distracts us from the real problem: a Chinese hard landing that may impossible to see until it's too late.

Best way to approach China's GDP figures: Ignore them! - The Economic Times

Don't Get Distracted by China's GDP Data - Bloomberg
 
. .

Best way to approach China's GDP figures: Ignore them!


Here's the best way to approach China's gross domestic product figures: ignore them. Things in the world's second-biggest economy are much worse than they appear.

Even if we take the 7.5 percent April-June growth rate at face value, its components suggest a more ominous scenario. Industrial production, for example, rose just 8.9 percent in June compared with May's 9.2 percent gain. For an export-addicted, developing economy, those are anemic increases. It doesn’t take a vivid imagination to see how that will crimp consumption and income growth in the second half of 2013.

But what's really at issue here is an unhealthy obsession with GDP numbers that tell us very little. What difference does it make if Beijing says it's growing 7.7 percent or 7.5 percent or 7 percent? China's level of output at the moment is certainly lower than any of these numbers. Just ask the factory-floor workers, steel-mill managers or electricity providers who are coping with the realities of fast-slowing Chinese demand.

Even in the best of times, China’s data can be about as accurate as tossing a dart at a chart on the wall. It's a structurally imbalanced economy distorted by top-down policies and considerable ``gray activities'' that are hard to measure, not least of which is the sprawling shadow-banking sector on which the central bank has been clamping down. There also are daunting scale issues. With modest resources, Chinese officials sitting in a room need to condense and capture the activities of almost 1.4 billion people at many levels of poverty, prosperity and urbanization over three months or 365 days. Then, they are expected to come up with a single figure that news agencies can headline and traders can react to.

On top of the many moving parts, statistical margins of error and incentives for fudging and manipulating data, consider how stage-managed Chinese data are becoming. Finance Minister Lou Jiwei told reporters in Washington last week that he expected growth to slow to 7 percent this year, below the official target of 7.5 percent. State-run media quickly whitewashed the record, updating stories to show that he had, in fact, said 7.5 percent.

What markets should be focusing on is the herculean task Premier Li Keqiang faces in improving the quality of growth and weaning China off its addictions to exports and overinvestment. Investors should be concerned by the bad-debt crisis festering out in the provinces, and the risks of social instability as growth wanes.

``Analysts, it seems to me, are assuming that China can start with a clean state and grow at a slower but healthier rate once it corrects its mistakes,'' Michael Pettis, a finance professor at Peking University, wrote in a July 10 report. ``All that piled up debt is simply ignored.''

China Exports Trouble

It's also worth considering how destabilizing China's downshift could be from Tokyo to Washington. Sliding Chinese growth is dismal news for Prime Minister Shinzo Abe's drive to end Japan's deflation. Abe had hoped to harness a big win for his party in Sunday's Upper House elections to implement structural reforms. That becomes more complicated as economic headwinds from across the East China Sea intensify.

The White House won't be happy either to see the world's only major growth engine sputter. After finally responding to U.S. calls to let the yuan rise, China may feel compelled to devalue its currency anew, enraging U.S. lawmakers.

The great Chinese slowdown bulls claimed would never happen is unfolding before our eyes. Obsessing about every little 0.2 percentage point GDP difference in output distracts us from the real problem: a Chinese hard landing that may impossible to see until it's too late.

Best way to approach China's GDP figures: Ignore them! - The Economic Times

Don't Get Distracted by China's GDP Data - Bloomberg

Sour grapes eh buddy?
 
.
These things were happening 2-3 years from now , and i bet America knew about it very clearly. Why so much hue and cry about it now?Maybe they were still hopeful.

I always believe the end justifies the means so if China succeeds and makes its ppl more prosperous i think its a valid path(even if its just cyclic debt kinda prosperity) .
China is run by Mob appeasement,we Numba 1 , Big projects big everything...ends up giving itself a 2nd generation trash talking nincompoop children. Lets see how it manifests.

I thing America has flipped 180 against China(dont know if the NSA guys was the tipping point). ill do wht i usually do ,wait and watch.
 
.
I haven't come across any positive news about Chinese economy for the last few days, even their mega infrastructure stimulus is not working.
 
.
question: Why don't you ignore them first? On the contrary, you post them...

You really care them... You fail to hide your jealousy.

You are excluded dear .... if you don't keep licking CPC $hit, who else would do it?

It's for those outside PRC, in the free world.

As for publishing, the data from PRC: Its more of a ritual ... because valid economic data from world over flows and rightly used by analysts; fabricated data from PRC is also published.

However, its better to ignore it, since it has no link to reality.
 
.
question: Why don't you ignore them first? On the contrary, you post them...

You really care them... You fail to hide your jealousy.

I am jealous of the chinese, who claim to have landed on the Sun.

Damn, I ... I just .. can't claim this !!!!

Anyway, No .. I won't ignore the chinese data.

Why should I deny myself of watching a free comedy show? :tup:
 
.
China has been doing this con job at least since 2008 with the active connivence of the US Fed which needs regular "good" news to kept the stock market up and the bond returns low so that they can cheaply inflate the debt bubble which is critical for avoiding deflation. It is absurd that an export oriented economy is showing such robust growth even when its major markets have slumped. They claim this is due to shift to internal consumption. At the same time, they project investment growth at such fantastic figures that it would need extremely high savings - so where does the consumption increase come from. In all, a case of smoke and mirrors liberally coated with snake oil.
 
.
QQ622A56FE20130716110058_zps75ccdc01.jpg


World Bank verified and published the data.

Well, we never make excuses that US are ahead of China, we are catching up because we accpect the truth, but you never accept the truth, instead you make so many excuses. We have no obligation to prove anything to you, because it is totally a waste of time.

Tired of you sour grape.

China | Data


cd59c66e-50e8-4786-aba3-90832741b8b6_zps2c7271b2.jpg




Let's just sit here and watch Indian member's entertainment show.
 
.
Well nobody in China is asking India to invest in China, so I don't know what significance is our GDP data to you to the extent that you keep making similar threads over and over. Get a life. I highly doubt China even needs FDI since we have so much cash that we have to buy overseas property. On the other hand, I am sure the Chinese government relies more than just GPD to implement economic policies. I just cannot fathom the reason behind all those threads.
 
.
Well nobody in China is asking India to invest in China, so I don't know what significance is our GDP data to you to the extent that you keep making similar threads over and over. Get a life. I highly doubt China even needs FDI since we have so much cash that we have to buy overseas property. On the other hand, I am sure the Chinese government relies more than just GPD to implement economic policies. I just cannot fathom the reason behind all those threads.

India never comments on china's gdp numbers .. huh.. what's your point.

If you re-read the OP, India is not even mentioned once.

World Bank verified and published the data.

Verified ??

Dear, you are clueless .... go out and breathe some coal fumes .. its free cigarettes in the air, not sour grapes. :laugh:
 
.
i m not an economist,so i really dont know ,China holds one third of the world's foreign reserve,can that be faked?can foreign reserve figures be faked?anyone knows?
 
.
i m not an economist,so i really dont know ,China holds one third of the world's foreign reserve,can that be faked?can foreign reserve figures be faked?anyone knows?

1. But do you know the total amount of FDI into PRC .. and how foreigners get to own scores of assets in PRC?

2. What is the value of oil Saudi Arabia exports vs its foreign exchange reserves; how much coal (% of world) PRC produces vs its forex reserves?

3. What is the value of such forex reserves, net of foreign owned debt?
 
.
i m not an economist,so i really dont know ,China holds one third of the world's foreign reserve,can that be faked?can foreign reserve figures be faked?anyone knows?

We are talking growth here...GDP growth. Nobody doubts China' s currency reserves....of course most of it is in worthless US treasury bonds...so good luck trying to ever encase it.

The issue is whether an admittedly over invested export oriented country can really grow blazing fast while it's markets are in the gutter. The suspicion is more because Chinese good news is vital for the west to prevent bursting of their ponzi debt bubble. It's purely an academic discussion and need not be taken personally.

i m not an economist,so i really dont know ,China holds one third of the world's foreign reserve,can that be faked?can foreign reserve figures be faked?anyone knows?

We are talking growth here...GDP growth. Nobody doubts China' s currency reserves....of course most of it is in worthless US treasury bonds...so good luck trying to ever encash it.

The issue is whether an admittedly over invested export oriented country can really grow blazing fast while it's markets are in the gutter. The suspicion is more because Chinese good news is vital for the west to prevent bursting of their ponzi debt bubble. It's purely an academic discussion and need not be taken personally.
 
.
Verified ??

Dear, you are clueless .... go out and breathe some coal fumes .. its free cigarettes in the air, not sour grapes. :laugh:

Suggest you write a letter telling world bank that they are wrong and by the way double India's firgure twice, and then you can claim that the figure is true.
 
.
Back
Top Bottom