China’s ‘Man-Made’ Data: It’s A Fantasy That No One Should Believe

When China reported that its economy grew 7% in Q2 – spot-on Beijing’s target – virtually no one believed it.

The veracity of the country’s economic data has long been the subject of debate and when FT called out the country’s National Bureau of Statistics for employing what we called “deficient deflator math” on the way to understating inflation and overstating output, China’s statistics bureau responded, saying that although there was “room for improvement,” the deflator wasn’t underestimated, GDP growth wasn’t overstated, and “both reflect the real situation.”

One could certainly be forgiven for insisting that the NBS is simply lying, because after all, the “real situation” looks like this:

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Given the above, it should come as no surprise that some analysts believe the actual rate of growth in China is closer to zero than it is to 7%. Here’s Reuters:

China’s economy is growing only half as fast as official data shows, or maybe even slower, according to foreign investors and analysts who increasingly challenge how the world’s second largest economy can be measured so swiftly and precisely.


But perhaps the biggest question is how a developing country of 1.4 billion people can publish its quarterly gross domestic product (GDP) statistics weeks before first drafts from developed economies like the United States, the euro zone or Britain, and then barely revise them later.


“We think the numbers are fantasy,” said Erik Britton of Fathom Consulting, a London-based independent research firm and one of the more vocal critics of official Chinese data. “There is no way those numbers are even close to the truth.”


The uncanny official calm in China GDP data may well be contributing to sceptics’ exit from Chinese assets just as the authorities struggle to manage a volatile stock market.


Fathom, which

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