Monday, September 17, 2012

Federal Reserve: Chinese Economic Data is Bogus

How bogus is the economic data coming out of China? Probably very bogus. Even the Federal Reserve is warning about the data.

Janet Koech and Jian Wang economists at the Federal Reserve Bank of Dallas, in a recent paper, make the message clear, don't trust Chinese economic data:
China’s economy deteriorated rapidly in 2012, with GDP growth slowing to 8.1 percent in the first quarter from 8.9 percent at year-end 2011. Second quarter GDP growth slid further, to 7.6 percent, the lowest reading since the height of the global financial crisis in early 2009.
Even with the decline, there is speculation that these figures may still understate economic slowing. Economists have long doubted the credibility of Chinese output data. For example, some studies indicate that GDP growth was overstated during the 1998–99 Asian financial crisis, when official figures reported that China’s GDP grew on average 7.7 percent annually. Alternative estimates using economic activity measures such as energy production, air travel and trade data ranged from 2 percent to 5 percent.
The dubious character of the official figures is no secret in China. Senior government officials, including Vice Premier Li Keqiang, dismiss official GDP data as “man-made” and “for reference only” because of political influence, particularly at the local level, on data reporting. 

Got that? The Chinese economy is deteriorating based on official data. However, the real situation is likely much worse.


  1. That's really something if even the Fed is saying the numbers are bogus!

  2. Now that's the pot calling the kettle black.

  3. China has massive economic distortions that are just beginning to unwind and, as discussed above, we have little in the way of transparency about what is actually happening. Even the PIIGS countries are a much better investment right now than China. They have been correcting for years, and we at least have some handle on the underlying situation. China, on the other hand, is a big black box, and they haven't had a real correction in decades, so massive imbalances have accumulated throughout the economy. At best, they are going to be treading water for some time, using "stimulus" efforts of various kinds to keep the economy from falling into a recession, and probably building up even more economic imbalances that will have to eventually be worked off.

  4. The Federal Reserve certainly has enough practice with its own creative efforts and manipulation to recognize bogus economic data. Yes, China has problems. Yes, they are bigger problems than officially admitted. Now, how about concentrating on the American economy, currency debasement, trillion plus dollar annual deficits, one hundred plus trillion dollar debt and unfunded liabilities, high unemployment,outrageous crippling regulations, extremely inefficient and intrusive income tax code, corruption, cronyism, unconstitutional power grabs, etc. Never mind all that says the Fed, just trust us with your money and investments. Blowing bubbles, creating troubles, and always looking out for us.... Right.

    1. You really are expecting too much.

      And you're just scratching the surface.

  5. Since when can a sane person trust the numbers being put out by a government?