Wikileaks: China GDP Numbers Are 'Man-Made'
Editor's Note: This story was originally published in December of 2010...
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¶4. (C) GDP figures are “man-made” and therefore unreliable, Li said. When evaluating Liaoning’s economy, he focuses on three figures:
1) electricity consumption, which was up 10 percent in Liaoning last year;
2) volume of rail cargo, which is fairly accurate because fees are charged for each unit of weight; and
3) amount of loans disbursed, which also tends to be accurate given the interest fees charged.
By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are “for reference only,” he said smiling.”
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In February, local Chinese Labor Ministry officials came to “help” with massive layoffs at an electronics factory in Guangdong province, China. The owner of the factory felt nervous having government officials there, but kept his mouth shut. Who was he to complain that the officials were breaking the law by interfering with the firings, he added. They were the law! And they ordered him to offer his workers what seemed like a pretty good deal: Accept the layoff and receive the legal severance package, or “resign” and get an even larger upfront payment….
Such open-secret programs, writ large, help China manipulate its unemployment rate, because workers who “resign” don’t count toward that number. The government estimates that roughly 20 million migrant factory workers have lost their jobs since the downturn started. But, with “resignations” included, the number is likely closer to 40 million or 50 million, according to estimates made by Yiping Huang, chief Asia economist for Citigroup. That is the same size as Germany’s entire work force. China similarly distorts everything from its GDP to retail sales figures to production activity. This sort of number-padding isn’t just unethical, it’s also dangerous: The push to develop rosy economic data could actually lead China’s economy over the cliff….
Pressure to distort or fudge statistics likely comes from up high — and it’s intense…
But local and provincial governmental officials are the ones who actually fiddle with the numbers… “The higher [their] GDP [figures], the higher the chance will be for local officials to get promoted,” explained [Gary] Liu.
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Hat tip to Yves Smith:
Jan 19, 2011 at 4:16 PM
Reader Comments (12)
http://pragcap.com/are-chinas-gdp-figures-fraudulent
wikileaks cable...
It's an open secret that China has doctored its economic and financial statistics since the time of Mao. But could it all go south now?
http://www.foreignpolicy.com/articles/2009/09/03/how_china_cooks_its_books
http://www.nakedcapitalism.com/2010/12/wikileaks-disses-chinese-gdp-stats.html
Know It's roller coaster, still xx harder for totalitarian states.
We NEED transparency for our global society that we created an cannot control. To many crises. We'd never gone to Iraq if we read the cables first?
How can a few wise leaders alone solve complex global issues pending ?
People need to be involved/need same info on these complex issues to let our global society decide & survive.
If democracy fails, the only solution is More democracy.
E-vote(power), not E-commerce(money) that changes our world!
so think ..our 200 y old democracy, then we beat china!
http://dailybail.com/headlines/the-united-states-debtor-and-leader-of-little.html
http://dailybail.com/home/china-warns-us-about-debt-monetization.html
http://dailybail.com/headlines/while-we-hunt-bin-laden-china-buys-the-world.html
Sure, it was a smidgen above a 10.2% forecast from Reuters and similarly beat Dow Jones Newswires’ 10.1% projection. But the truth is that most investors already had a pretty clear idea what the number would be.
This is because Hong Kong’s well-respected Phoenix Television reported the 10.3% result on its website a full day prior to the release, citing an unidentified source at the central bank.
http://www.marketwatch.com/story/chinas-worst-kept-secret-2011-01-19