China Lies Says Eaton CEO: Economy Grew Only 3-4% In 2012

Tyler Durden's picture

When it comes to estimates of China's growth rate, we could go with the local politburo propaganda which even China itself has admitted is goalseeked worthless drivel fit "only for reference", or we could listen to a megacap CEO, who actually is on the ground and whose business model depends on accurately predicting the underlying economic reality of the world's biggest nation. We chose the latter, in which case we now know that China's 2012 GDP growth was only 3-4%, half the reported 7.8%.

From Bloomberg:

Based on indicators such as consumer consumption and electric power usage, China’s gross domestic product probably grew 3 percent to 4 percent last year, Eaton Corp. Chief Executive Officer Sandy Cutler said yesterday in a telephone interview. Growth is accelerating now that China is past the distractions from its leadership change, he said.


“That’s what we and so many multinational companies have been feeling there in China for the last year and a half, the economy really hasn’t been growing at 7 or 8 percent,” Cutler said. “If we could get back to an 8 percent growth rate in China for 2013, that would be a pretty darn good year.”


His skepticism about the data echoes complaints from economists such as Li Wei of Standard Chartered Plc in Shanghai that China had inflated third-quarter growth before the November congress where the ruling Communist Party had its decennial transfer of power. Cutler runs a manufacturer that got more than half its 2012 revenue of $16.3 billion from outside the U.S.


Mark Williams and Qinwei Wang, economists with Capital Economics Ltd. in London, wrote in October that China’s third- quarter economic growth of 7.4 percent was “implausible.” Standard Chartered said in October its analysis indicated the economy expanded 6.5 percent in the quarter.

So yes, China lied... again, and as always... and especially around the time of its Politburo transition in November. As shocking as this news may come to most, we are confident the collective act of sticking heads in the sand shall continue. After all it was only 2007 when the S&P was saying everything was fine.

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TotalCarp's picture

Out of those 3-4% how much is accounted for by govt infrastructure projects? 6% at least? 


GetZeeGold's picture



The census of the ghost cities hasn't come in yet....too early to get a handle on the real numbers.

Hippocratic Oaf's picture

They'll just tear everything down and rebuild the name of progress.

It's the China way.


(it's going to have to be to sustain 'growth')

youngman's picture

a couple more sink holes will suck it all up.....

Sudden Debt's picture

they call'em GDP generators

trav777's picture

3% here would be a gigantic success boom

The Mist's picture

The US used to be afraid of the USSR, thinking it was growing and getting more powerful.

Truth is you can't trust communist governments, and China is no exception.

When people realize this, it's game over. China was supposedly the engine to pull the world out of crisis, and it can't.

Big Corked Boots's picture

"You can't trust communist governments"

How true. Just look at our own.

ali-ali-al-qomfri's picture

When you point your finger at someone you have three fingers pointing back at you,

cast doubt on everyone but yourself.

TotalCarp's picture

That i agree with although a trick question is: can you trust US govt stats? Its likley not as outlandishly BS as chinese "stats" but ther are massaged left right and center to goose up russell 2k are they not?

The Mist's picture

I reckon the US is mainly honest, but it has been using some tricks with inflation numbers. Nominal GDP growth of 5% and inflation of 5%? Just adjust inflation data and way of calculation and inflation turns to 3%. Instant 2% GDP growth.

But these means are limited. And although Western governments are full of bullshit, I believe the data they show is mainly true.

China however... If they were to tell their citizens that the actual GDP growth was only 3%, people would riot even more than they do know. They have to lie to keep the people calm, the people only allow the communist government to rule as long as it'll bring them economic advantage. 

TotalCarp's picture

i suspect that western macro data is padded in much more nuanced ways ie via seasonal adjustments, missreporting that gets corrected on a revision 3 months later that noone sees etc. i mean i am sorry i am apolitical but some of the pre-ellection numbers were just as meaningless as the 7.8% gdp print. 


Rip van Wrinkle's picture

"But these means are limited."


Limited by what?? Those financial analysts and journalists who ask all the probing questions? Or simply honesty?

NoDebt's picture

Absolutely.  I'm afraid a lot of people think that the veneer of Capitalism in China somehow makes their government structure irrelevant.  That, I think is a key mistake in their analysis.

Plus..... nobody left with any money to export to, see? 

Also, I believe that their share of GDP that is private consumption has been SHRINKING, not growing in recent years, if I recall some data a saw (possibly here?) not long ago.  If true, that would tend to support the assertion they are just another "command economy" with a free market/capitalist mask on.

jcaz's picture

...Exactly why it's always an adventure trying to do business with China....

ultraticum's picture

And US inflation remains under control . . . .

insanelysane's picture

A big storm hitting the East Coast on Friday.  Will be responsible for adversely affecting all economic indicators for the next 2 quarters.  Just the thought of the storm will be enough to affect the numbers.

Son of Loki's picture

"a big storm...'...might interrupt the mail this weekend...oh, wait....forget that.....

LawsofPhysics's picture

Now who's the "cleanest dirty shirt"?  At least you know up front to have bribe money on hand when moving into Chinese markets.

Iconoclast's picture

Those ghost towns full of new build can't be wrong. Can they?

LawsofPhysics's picture

Indeed.  The peasantry in China will be moved into those "ghost towns".  For Americans, it will be FEMA camps - "winning"

Cognitive Dissonance's picture


Maybe those China ghost towns are America's FEMA camps.

<We certainly paid for them.>

LawsofPhysics's picture

I don't think so.  I have done business with many people from China in the U.S. and abroad.  One thing I have learned, the Chinese hire Chinese, and only do business with anyone else when they need something or some critical information.  They share nothing about what they are up to and want to know everything about your operation.  I still do business with many, but I have adopted their own philosophy from the American perspective.  If anyone leads to world into a protectionist stance, it will be the Chinese.  In their view, those cities are far too luxurious for American scum.

trav777's picture

I have experience with the hindu mafia in IT; they behave the same way

the only people who show no solidarity are european whites...punks.

Cognitive Dissonance's picture

"China’s gross domestic product probably grew 3 percent to 4 percent last year, Eaton Corp. Chief Executive Officer Sandy Cutler said yesterday in a telephone interview."


Sandy, the China double digit growth story has been the world's savior for a decade. And now you're saying China lied to the world.

Say it ain't so Joe Sandy, say it ain't so.

TotalCarp's picture

Cramer will tell you this is great news - moar chinese stimulus guaranteed!

I cant decide how bad it will be if china tanks.. Asia is gonna be a sht show.. Indonesia/Malaysia/Australia gonna walk into a wall. It will make late 1990s asian tigger bumming look like gentle petting.  

Divided States of America's picture

No one speaks the truth these days. If you do (Egan Jones, Assange, S&P), you will be put into place by the government agencies that is supposed to be protecting you.

Volaille de Bresse's picture

Trav777 is gonna cum in his red-white-and-blue underwear!

trav777's picture

i'm already spent from jizzing on your girl's face

dick cheneys ghost's picture

How many lies does it take to maintain______________(fill in the blank)

Cognitive Dissonance's picture

How many lies does it take to maintain.......the previous lies.

<What did I win?>

dick cheneys ghost's picture

Congrats..........You have just won an all expenses paid vacation to Northern Mali!!

FMR Bankster's picture

And if Mali doesn't appeal to you just play the lottery. You could win twice in one week, like those folkes in Arkansas. Don't pay any attention to the rest of that distracting noise.

GMadScientist's picture

...a stranglehold on the American public?

One, but it's gotta be a really really big lie!

yogibear's picture

So what else is new? The US lies about it's GDP, unemployment and CPI. China lies as well. 

China lies to keep investors money. 

The moment China reveals the real numbers the Wall Street hot money would disappear in an instant.

GMadScientist's picture

I think they might have some bonds they could liquidate.

Wall St ain't shit.

LawsofPhysics's picture

maybe.  Depends how big it is relative to the Fed's pile and to be honest, who knows the real truth on that one.

Rustysilver's picture


You don't think that "wall street" guys know about these numbers? The problem for them is to acknowledge this.

GMadScientist's picture

Okay...everyone think up a real number between -3.0 and 10.0. Go!

"China Lies", says Eaton CEO...makes much more sense than the title which implies that the Chinese are making up numbers about the growth of the Eaton CEO.

Ricky Bobby's picture

It really is a prison planet!

orangegeek's picture

Communists don't lie.


And China is the economic future of the planet.


And pigs fly.

Schmuck Raker's picture

Never a Chinapologist around when you need one...

Sudden Debt's picture


_ConanTheLibertarian_'s picture

I'd say China will go to war with Japan because they need the distraction.

Bubuzinho's picture

Yea, and our unemployment rate is really 7.9%...

philosophers bone's picture

CNBC no longer reporting "GDP" - that term has been replaced with the more relevant and accurate "DGDP" - Double Gross National Product.  The old GDP calculation was not considered relevant as governments around the world haven't used the old formula for some time now.

reader2010's picture

Bullish. Starting a war with Japan will get their GDP back onn track. BTW I heard the pronunciation of GDP in Chinese means fart. Go figure.