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In China; 1 + 1 = 7.7% GDP Growth (And Don't Argue)

Tyler Durden's picture




 

With China's shadow-banking system turmoiling and data not at all supportive of the same kind of growth investors are hoping for, some were surprised when China's GDP magically turned out at the 7.7% expectations deemed acceptable by the government. As Xinhua reports, not all is as it seems.  

China's GDP amounted to 56.9 trillion yuan (9.3 trillion U.S. dollars) in 2013. However, the aggregate of the provincial GDP figures, which were independently calculated and released, was about 2 trillion yuan more than the 56.9-trillion-yuan figure arrived at by the NBS, even though three of the 31 localities that were yet to release the figures were not included.

This has aroused suspicion (just as we saw with the PMI data in the past) that some growth-obsessed local officials have cooked the books.

 

Via Xinhua,

...

 

For 2011, the aggregate GDP figure of all localities was 4.6 trillion yuan more than the NBS tally of 47.1 trillion yuan. In 2012, the aggregate figure was 5.76 trillion yuan higher than the total of 51.93 trillion.

 

...

 

"This is an old problem which recurs every time the data is released. The gap is mainly caused by duplicating calculation," Zhang Liqun, researcher at the Development Research Center of the State Council, told Xinhua.

 

Overlapping calculation often occurs when a big company has many subsidiaries, Zhang explained. In this case, the added value of the subsidiaries tend to be double calculated.

 

...

 

"In this case, overlapping calculation is unavoidable," he added.

 

Cong also pointed to price divergence among different regions as a major factor for the gap.

 

"For a certain product, you have a price in, for instance, Hebei Province. But the price of the same product would be different when it is sold in Beijing. However, the NBS statistics are based on a unified nationwide price."

 

...

 

In addition to double calculation and price differences, experts pointed to the so-called "GDP obsession" of local officials as another key factor for the gap between national and local data.

 

"It is possible that the national and local aggregate figures are not in accordance, but that is not reasonable if local figures are higher year after year than the national, and never go in the other direction,"

 

...

 

At the press conference, even Cong of the NDRC admitted to the phenomenon.

 

"Due to local officials' obsession with governing performance, the local figures will be more or less overblown. The NBS is working hard to correct this," he told reporters.

 

...

 

Experts also suggest the assessment standards of local officials' performance be comprehensively changed.

 

"In assessing local officials' performance, we should not lay too much stress on GDP growth rate, but also care for areas related to social well-being, including improving the employment rate," said Cai Zhizhou, a researcher with Peking University.

So, in summary, the number don't add up; they never added up; local governemnt officials always overstate their performance... but they always have so don't worry about it... oh and we always hit our expectations...

Is that why - all of a sudden - when the shadow banking system suddenly exposes those swimming naked, that capital markets in China are in a crunch?

 

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Thu, 01/23/2014 - 22:04 | 4361150 wallstreetapost...
wallstreetaposteriori's picture

Thats what fonestar says about bitcoin.

Thu, 01/23/2014 - 22:42 | 4361293 disabledvet
disabledvet's picture

yeah, perrty much. I mean "as with CNBC so it is with ZH?" this is a very good article:

http://www.bloomberg.com/news/2013-11-27/slump-watchers-dump-yield-curve...

but there is a fly in the oinkment:

http://www.marketminder.com/a/fisher-investments-14-false-fears-for-2014...

some of those "false" fears seem quite real YTD.

from ZH contributor Asia Confidential http://www.forbes.com/sites/jamesgruber/2014/01/05/betting-against-china...

Why not predict a Chinese collapse? Interest rates seem to know something about those State run banks that the rest of us do not:

http://www.bbc.co.uk/news/business-25822544

hmmmmmm. "lunar new year." sounds familiar.

http://www.theconglomerate.org/2010/08/crises-and-false-positives.html
http://www.computerweekly.com/blogs/david_lacey/2007/03/y2k_lessons_forg...

interesting blog site...only "lunar New Year happens every year." If the problem with the computer's clock was that it only had four digits...why would going from 1999 to 2000 matter?

Of course who doesn't love "a huge shot of liquidity" in the midst of one of the greatest manias in history?
http://research.stlouisfed.org/publications/review/09/01/Thornton.pdf

hmmmm. "bad ideas suddenly become good ideas" problem? (no i'm not going to go there...but "that other date" as always stood out to me. too obvious perhaps?)

Thu, 01/23/2014 - 22:06 | 4361162 The Final Straw
The Final Straw's picture

I'm first!

Thu, 01/23/2014 - 22:07 | 4361168 The Final Straw
The Final Straw's picture

Damn.

Thu, 01/23/2014 - 22:08 | 4361170 q99x2
q99x2's picture

I liked the previous "China" article better.

Thu, 01/23/2014 - 22:13 | 4361181 Buck Johnson
Buck Johnson's picture

It's amazing and our markets are running scared about what's about to happen in China.

Thu, 01/23/2014 - 22:53 | 4361314 NoDebt
NoDebt's picture

Not really.  The ONLY thing that has made markets suffer any notable pull-back over the last 5 years of nearly straight-up performance is the credible threat of worldwide, systemic bank extinction.  It doesn't matter who falls first, they're all tied together like a bunch of out-of-shpae 300 lb. mountainclimbers.  If one goes down, his weight will drag them all down off the side of the mountain.

Additionally, all efforts at recovering from the 2008 banking crisis have been undertaken by the world's central banks for the benefit of their member banks.  They are "taking care of their own".  The real economy has been largely ignored, relegated to fend for itself on the scraps that might accidentally trickle out of the great banking reflation.

Knock a leg out from under the banking system, everything goes down with it.  China, Europe, United States... doesn't matter.  Wherever it hits, it takes down the rest of the planet with it.  They know it, and that's why they're scared of it, wherever the danger of it happening might present itself.

Fri, 01/24/2014 - 01:41 | 4361757 Offthebeach
Offthebeach's picture

.
..."Under Modern Mountain Technical ( MMT ) rehypothecation climbing, a climbing rope can be 1/32 weight rated. So a 300 Squid, Whale or ChiCom need only a 8 pound rated rope. Anything else is barbaric and inefficient. "

From " The Zen of MMT Climbing ", by Yuervd Greenspan, Tymithay Geithner, BiBi Bernanke and Yeavett Yellen. Paris, France 1936

Thu, 01/23/2014 - 22:13 | 4361183 tahoebumsmith
tahoebumsmith's picture

China is fucked... Every poo fry rie over there wants to be like Hollywood. A country that use to be the biggest savers has turned into the next mega credit bubble. Empty cities and Malls? Don't worry they will come? Riddle me this chinese bat bitchez? How does a country survive when close to 800 million people that wished they were Americans are in default because they followed the American Dream?

 

Fri, 01/24/2014 - 06:37 | 4361985 Dr. Bonzo
Dr. Bonzo's picture

That's funny you mentioned that 800 million figure. That's exactly the number of Chinese that could polinate the rest of the Northern Hemisphere and the Chinese continent wouldn't even bat an eye.

Yeah, China might be fucked. The Chinese might be fucked... but the Chinese who fucked the rest of the Chinese aren't fucked in the slightest. Apparently they've absconded with 4 trillion and change and they're coming to a luxury residence near you... and sooner than you think. And here's the really goooooood shit... they're bringing aaaaaalllll their fucking baggage with them. Their guangxi bullshit, their white envelope scamming bullshit, their cardboard dumpling bullshit, their magic elephant tusk penis powder bullshit... allllll of it. You think Wallstreet scamsters are bad? Just hang in there bro. It gets better.

2000 years of backwardass superstition.... alll coming to a an overpriced luxury dump near you.

 

Ni hau motherfuckers.

 

Thu, 01/23/2014 - 22:21 | 4361201 Rising Sun
Rising Sun's picture

Just one question.

 

If China is riding so high, then why has the Shanghai index been in the fucking toilet since 2010???

 

Hmmmmm.....maybe the markets know something?

Thu, 01/23/2014 - 22:21 | 4361205 joego1
joego1's picture

How anyone could invest in that sea of lies I will never know.

Thu, 01/23/2014 - 22:38 | 4361266 LMAOLORI
LMAOLORI's picture

 

 

Well they may learn the hard way - on the other hand real capitalists are allowed to fail right?

 

China bank chief shuts door on burned investors

snip...

"The chairman of the Industrial and Commercial Bank of China (ICBC), the world's largest bank by assets, said Thursday that it would not compensate investors for losses related to a fund product it marketed to them.

Jiang Jianqing told CNBC that the event can be considered educational, with investors learning the lesson of moral hazard in financial markets.

"ICBC will not rigidly pay out the funds to the investors," he said while attending the World Economic Forum in Davos, Switzerland. "We do not assume that rigid responsibility."

Thu, 01/23/2014 - 22:41 | 4361289 Fred123
Fred123's picture

The connected investors will be compensated, bet on it.

Thu, 01/23/2014 - 22:37 | 4361262 Atomizer
Atomizer's picture

Solution: Cut another China Stimulus check and co-op with building new infrastructure in Africa for transients to migrate. Digging for rare metal elements can become the next wave of employed slavery.

Thu, 01/23/2014 - 22:54 | 4361346 disabledvet
disabledvet's picture

Too Big to Fail Part Deaux?

http://en.wikipedia.org/wiki/Too_Big_to_Fail_(book)
Hmm. That's a surprisingly short review.

Well...he is still getting air time when last i checked.
http://en.wikipedia.org/wiki/Andrew_Ross_Sorkin

http://en.wikipedia.org/w/index.php?title=Talk:DealBook&action=edit&redl...
wow, talk about "not a lot of talking about creating talking." I wonder why that is...

Fri, 01/24/2014 - 04:29 | 4361909 X_mloclaM
X_mloclaM's picture

dude, Chinese move to Africa to mine now

but so what, ppl should move where ever they want to

job market rigidity is a big social and legal problem

too many carpenters, shouldnt mean force the issue, it means be the best/specialist, move, or change profession

immigration, trade free, unions banned, tax sales n ban the rest

Thu, 01/23/2014 - 22:39 | 4361279 Fred123
Fred123's picture

The Chinese people that I know are absolutely clueless on what is happening in their country. They think everything is fantastic, their leaders (rofl....) are fantastic, the economy is great and that they will all be rich as soon as they overcome the US and Japan. Meanwhile, they have all their money in the banks in China while their Dear Leaders and their families have offshored their ill-gotten gains. I feel very sad when I talk to these people, they for the most part are decent people just wanting a better life. A storm of reality is about to hit them and they are/will be defenseless.

Fri, 01/24/2014 - 01:45 | 4361762 Offthebeach
Offthebeach's picture

Just print, have People s Bank buy every bond. Its only internal work camp script anyways.

Fri, 01/24/2014 - 04:32 | 4361912 X_mloclaM
X_mloclaM's picture

this works till payments dont meet expectations as the real economics of what you suggest fail on principle(evry time)

this is illustrated best by Tyler stating that "ppl understand the Fed's mandate"

 

which is why they try to move the mandate's subjective goalposts from price stability (1913 prices, ie: 20.67 per oz troy), at 0% or lower general price inflation per annum, to 2% and stare into clear pyramids with what was once a yung buks redeemable money

Fri, 01/24/2014 - 06:46 | 4361990 Dr. Bonzo
Dr. Bonzo's picture

Ditto. But you gotta consider the context. You're talking people who are 1 generation removed from being serf/tenant farmers for 2000+ years. Within one generation they've gone from substance farming to iphone toting Gucci bangers... you gotta laugh at the shit you see.

I have no issue with the Chinese. Unfortunately for the rest of humanity... there are 1,300,000,000 of them... you'll appreciate just exactly what those numbers mean when the Chinese have figured out every angle on US immigration policy and the California goes 40% mainland Chinese within the next 20 years, and they ain't Americanizing either.

 

 

Thu, 01/23/2014 - 22:49 | 4361327 Son of Loki
Son of Loki's picture

The voracious 'merican consumer is supporting the soaring wealth in China [by buying every piece of crap he/she can] while the wealthy in China are pushing up the global housing market as they move their millions out of the PRC as fast as they can from what I read on ZH, Bloomberg and China Daily.

Fri, 01/24/2014 - 12:06 | 4362775 strangewalk
strangewalk's picture

China has always been totally corrupt and plutocratic and when things have gotten too close to implosion many of the richest have always fled with their wealth, it's an historical pattern. That's why there are such large diasporas of rich Chinese in most Asian countries--Malaysia, Indonesia, the Philippines, Vietnam, Thailand, Camodia, Laos, Myanmar--and to a lesser extent even India and the central Asian nations are all either completely or partially controlled by rich Chinese diasporas who are universally hated. In what is happening now as the latest and greatest wave it's coming to a place near you especially if you live in North America or Australia--rich Chinese are now flooding into California and 50% of all RE sales in 2013 were to Chinese. Soon you're going to working for them and unless you can speak Mandarin and are really good at genuflecting (it's called the kowtow), it will be for slave labor wages.  

Fri, 01/24/2014 - 12:50 | 4363058 Offthebeach
Offthebeach's picture

Why...why... I find it hard to belive a nation of Community College dropouts, disability, section 8ers, LBQT, meth, malt, NFL WWF mudders, flatscreened lawyers and Realtors wouldn't resist.
/s

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