By Mikaprok for SouthFront
Rule 1 for East lovers: “Everybody lies.”
I’ll start with an interesting sketch on official chinese statistics.
In the autumn 2016, the column of the Party economist and the director of the National Bureau of Statistics, Ning Jizhe, came out in the mouthpiece of the CPC “People’s Daily”.
Some of China’s local governments are bumping up economic data told us official.
He, analyzing the results of the year, touched the issue of regional economic indicators.
It turned out that they are groundlessly overestimated for the sake of momentary interests.
Later this year a committee headed by Chinese President Xi Jinping in October approved reforms to boost the accuracy of economic data.
Beijing sends 20,000 investigators across the country to directly collect data through a sample survey, and it’s not possible for the numbers to be wrong.
The country is so big, that the problems with number simply insoluble through other means.
Several provinces in the north-east of the country were found guilty of providing incorrect reporting.
In particular, jugglers from Liaoliang shifted the real indicators of their region almost 20% up, playing with the concepts of nominal and real growth rates.
What do we see here?
Classic management fork.
The governors do not deal with the task and objectives. They are delegated to understand the situation of the Central Apparatus of the CCP and carry out a responsible mission.
In a number of cases, this mission seems a priori impossible.
Imagine yourself in place of the local head.
It is inconceivable to show the unfulfilled task to the party and government. It is a signal to check for flaws and, of course, they will find it. A corruption scandal will emerge and the manager will be shot.
In the case of a nominal performance, also known as cook-book, you are under the new rules came across, conducting an audit of all provincial enterprises looking for manipulation.
In this case the fate of the tricky manager is the same.
While colleagues understand the data problems, our modest mission is to understand whether it is possible to trust official data from the Middle Kingdom.
The CPC Central Committee answered this question in the following way: the country’s GDP 2011-2014. it makes sense to review, since the basis of this data can be blurred by improper “rounding”.
Check up the wording.
It is believed that China’s main economic indicator is growing by 6.5-7 %% per year, which suspiciously coincides with the bar set by the CPC Central Committee. Literally – to the digits after the decimal point.
Raw data is generally more useful for assessing the state of an emerging economy. In 2007, Chinese Premier Li Keqiang, then the top official of Liaoning Province, famously said he based his assessments of the economy on three indicators — railway cargo volume, power consumption and outstanding bank loans.
If a top Communist Party leader does not trust China’s official GDP data, who could? Li’s three indicators have since been embraced by economists and are now collectively known as the “Li Keqiang index.”
In the exchange environment of Southeast Asia (Singapore, Hong Kong and Tokyo), since the beginning of the 2000s, in the analysis for VIP customers, they do not include the top 5 large figures related to the Chinese economy.
Usually, analysts look at the particulars, their difference and the intersection. You can see the dynamics of growth in property prices, sales of a certain type of services and, for example, the estimated volume of the shadow economy by years (greatly increasing over time, by the way).
If we construct several graphs and compare them with national statistics (taking into account the decomposition and features of summation), the difference at any time will be more than 20%.
Therefore, even Hong Kong uses Western sources and believes not in absolute, but in relative figures all about mainland China.
I will not discuss the nuances, but mentioned fact, long ago known to all financial advisers, no one says aloud.
Only in the last couple of years the accidental injections are seeping into the press, which are considered annoying hod-wash and everyone continues to use official statistics from the “Red Star”.
Although it is fully understandable – it is easier not to notice mistakes, than to learn from them.