Is China massaging macro data? (Ans: Yes)23 June, 2012, 19:59. Posted by Zarathustra
We have heard a lot about the delusional ideas that optimists have on China economy over the recent year or two as the economy started to slow. One of the ideas we heard is that because China can make up the numbers, China will be able to lie its way out of any nasty situation.
No, we are not making this up: this is an argument being put forward by someone who was born and grew up in China. Chinese people already knew that the government actively massage economic data to a point that it can deceive people into believing that everything is fine even though it isn’t, and that if the government keeps on making stuff up, they seem to believe that it will turn out just fine, eventually.
We are constantly frustrated by how unusable macro data can sometimes get, and how some of the data are downright meaningless. That is why we sometimes are forced to rely on anecdotes and observation instead. The result has been that the bubble was much larger than what the data (or the lack of data) would lead you think, and the current slowdown is worse than what the data (or the lack of data) would lead you think.
So it came as absolutely no surprise that New York Times realises that China has been massaging economic data to make the current slowdown looks less bad. Even the accuracy of electricity output, which has been identified as a more accurate indirect gauge of the economy, is now being called into question:
Another top corporate executive in China with access to electricity grid data from two provinces in east-central China that are centers of heavy industry, Shandong and Jiangsu, said that electricity consumption in both provinces had dropped more than 10 percent in May from a year earlier. Electricity consumption has also fallen in parts of western China. Yet, the economist with ties to the statistical agency said that cities and provinces across the country had reported flat or only slightly rising electricity consumption.
In May, we saw a slight uptick in electricity output growth at national level. Although the uptick does not look large enough to lead us to believe the economy has bottomed out, we now have to wonder if this uptick was even real.
Source: National Bureau of Statistics