China Stunner: Real GDP Is Now A Negative -1.1%, Evercore ISI Calculates

Tyler Durden's picture

With Chinese data now an official farce even among Wall Street economists, tenured academics, and all others whose job obligation it is to accept and never question the lies they are fed, the biggest question over the past year has been just what is China's real, and rapidly slowing, GDP - which alongside the Fed, is the primary catalyst of the global risk shakeout experienced in recent weeks.

One thing that everyone knows and can agree on, is that it is not the official 7% number, or whatever goalseeked fabrication the communist party tries to push to a world that has realized China can't even manipulate its stock market higher, let alone its economy.

But what is it? Over the past few months we have shown various unpleasant estimates, the lowest of which was 1.6% back in April.

Today we got the worst one yet, courtesy of Evercore ISI, which using its own GDP equivalent index - the Synthetic Growth Index (SGI) - gets a vastly different result from the official one, namely Chinese growth of -1.1% annually. Or rather, contraction.

To wit, from Evercore:

Our proprietary Synthetic Growth Index (SG!) fell 1.1% mim in July, and was also down 1.1% y/y. No wonderglobal commodities are so weak. The most recent 18 months have been much weakerthan the 2011-13 period. Even if we adjust our SG I upward (for too-little representation of Services — lack of data), we believe actual economic growth in China is far below the official 7.0% yly. And, it is not improving, Most worrisome to us; the 'equipment' portion of Plant & Equipment spending is very weak, a bad sign for any company or country. Expect more monetary and fiscal steps to lift growth.

And here is why the world is in big trouble.

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kliguy38's picture

I'm stunned its that high

clooney_art's picture

I suppose everyone believes the real US GDP is in the positive. Every darn statistic is a fake.

Viffer's picture

There is a very high percentage that you are correct.

Jumbotron's picture

Here is what China needs to do immediately.

First, alert the military that there a terrorist Buddhits monks running amok in EVERY ghost city in the country.  They need to start a sustained carpet bombing of all the ghost cities today.  Then after the terrorist Buddhits monks have been cleared, China should embark on a massive rebuidling program of the ghost cities where they once stood.

And repeat every five know.....terrorist Buddhits monks.



Paul Krugman's Cat

Vampyroteuthis infernalis's picture

"Signed, Paul Krugman's Cat"

It looks like Paul Krugman could learn a lot from his brilliant cat!

NoDebt's picture

Thus proving that China was invented by the CIA.

I know, I know.  NoDebt's off his rocker again, right?  Well, calm down and think about it for a minute.  Wouldn't that explain a lot?

ThroxxOfVron's picture


"At age 10, Sun Yat-sen began seeking schooling.[1] It is also at this point where he met childhood friend Lu Haodong.[1] By age 13 in 1878 after receiving a few years of local schooling, Sun went to live with his elder brother, Sun Mei (??) in Honolulu.[1]

Sun Yat-sen then studied at ?Iolani School where he learned English, British history, mathematics, science, and Christianity.[1] Originally unable to speak the English language, Sun Yat-sen picked up the language so quickly that he received a prize for outstanding achievement from King David Kal?kaua.[10] Sun graduated from Iolani in 1882. He then attended Oahu College(now known as Punahou School) for one semester.[1][11] In 1883 he was soon sent home to China as his brother was becoming afraid that Sun Yat-sen would embrace Christianity.[1] "


Later his Hawaiin education and dalliances with Christianity were strenuously contested/denied for reasons of politics in China -particularly due to the fact that Chinese Muslim Imams involved in the formation of the revolutionary government would not tolerate him as leader if true.

The parallels to Obama's subterfuge concerning his birthplace and education records are somewhat interesting.

That Sun Yat-sen was educated in Hawaii is now accepted; but, claims that he may also have procured a fake Hawaiian birth certificate are still hotly contested... 


TeethVillage88s's picture

"Sun's chief legacy resides in his developing of the political philosophy known as the Three Principles of the People: nationalism (non-ethnic, freedom from imperialist domination), democracy (to Western standards), and the people's livelihood (social justice through Georgist tax reform[4]).[5]"

- Interestingly, these are the same Values that people on ZH Hold

Consuelo's picture


I think your 'rocker' is functioning quite well actually...   There was a reason for Chairman Mao's ascendance, just as there was for the Shah of Iran's rise and 'installment'.  

KnuckleDragger-X's picture

Nonsense, the Chinese would never lie and it's all shiny forever.....

CarpetShag's picture

Subtract real inflation from the official GDP "growth" in the USSA and you get a number nearer -4%.

Sudden Debt's picture


you're making the kids cry...

NoDebt's picture

Do they do one for the US?

Tsar Pointless's picture

It's the George Costanza Economy.

"My whole life is a lie!"

NoDebt's picture

"It's not a lie if YOU believe it."

Usurious's picture
Usurious (not verified) NoDebt Aug 26, 2015 1:25 PM

manure bitchez

JustObserving's picture

It's not a lie if the aptly named Steve Liesman says it

Hohum's picture

Synthetic Growth Index is perfect for a make believe world.

Usurious's picture
Usurious (not verified) Hohum Aug 26, 2015 1:26 PM

we need more synthetic debt.......

Sudden Debt's picture

send them a calculator that's MADE IN AMERICA!

Those gdp number will be in the +10's!!!

JustObserving's picture

What about the fictitous growth in the land of the free? How about calculating that, Evercore?

There is no real growth in America.  Inflation is adjusted lower to create a fake growth

Let's not forget that the Chapwood Index for 2014 was 9.7% and official CPI in the land of the free was only 0.8%.  So the Nominal GDP of 5.6% for 2014 becomes real GDP of -4.1%.

The revised real GDP for years 2011 to 2014 worked out to -6.2%, -6.5%, -6.5%, -4.1% respectively.

What is the Chapwood Index?

"The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation."

TeethVillage88s's picture

Synthetic Growth Index (SGI) - I like it.

agent default's picture

The day of reckoning is approaching fast for everyone. This is probably the only time in history when the whole world implodes at the same time.

NoDebt's picture

No, the Great Depression (the original one- the one that will look tame compared to what's coming) was a worldwide event as well.

BandGap's picture

That is the intent. From the start. It is a requirement of Cloward-Piven.

Osmium's picture

Quick, build MOAR empty cities!

Chuck Knoblauch's picture

It's in China's interest to report bad news.

It forces the FED into a corner.

The Chinks want QE4 in the US.

And they will keep buying gold.

And dump US debt.

Forcing more devaluation in the USD$.

Consuelo's picture



Shit gets real when we read (next week, perhaps?), that China dumped another couple hundred $Billion in U.S. paper onto the market.

JLO's picture

Now a copper crash would be in order

I Write Code's picture

Doesn't China still have 600,000,000 people living in 19th century conditions - except for their smart phones?  In such a condition I don't know how you measure real growth, they have an immense "capex" overhang for another fifty years.

Maybe a cut in Chinese "growth" simply means there's no more manufacturing they can practically steal from the US and Europe.  Then their only growth is going to be internal consumption, which they have always grown very, very slowly, even before netting out that capex business.

So, yeah, I can see that maybe China *has* hit a ceiling, and all their PEs now have to be reduced, and just after they did their market exercise and it went to the moon.  Bad timing, guys.

RockySpears's picture

Why doesn't America put say, 14.1% of its' population in the empty Chinese cities?  Would that not help everyone?


US gun crime disappears, Chicago gets a boost, Detroit might actually start making cars again.


Just a suggestion.

CarpetShag's picture

Won't work. EBTs aren't accepted.

Tsar Pointless's picture

All of those poor, white moochers from the South wouldn't last a day there, I agree, without their gubmint assistance.

CarpetShag's picture
All you have to do is F**k - and 9 months later you get the big buck....!

I Write Code's picture

Donald Trump can give them a good price on 20,000,000 Mexicans.

CarpetShag's picture

So few women, they'll never be able to include prostitution in the GDP.

RagnarDanneskjold's picture

Even the official stats aren't hiding the recession in the rust belt provinces. 

GDP Growth By Province Through 2015 Q2; 5 Provinces in Recession
stant's picture

Isi is a new terrorist group just like the bond rating sp and Moody's

g speed's picture

Years ago I said China is broke-- my financial analysis consisted of measuring the width of the isles at local Walmart, the depth of stacks of goods on the selves and the number of different products in the inventory.  A growth in isle width disclosed a decrease in the number of shelves in a particuar store. The diminished depth of shelf stacking told of decreased sales because of the need to keep new products on the shelf (less inventory to sell in a time limit) A decrease in number of different products showed major suppliers (China) reticence to speculate on the development of new geegaws. The amount of checkouts being manned and the majority of the checkouts positioned nearer the food section also spoke to less sales of non food items. 

Walmart is China's biggest retail outlet world wide and was a good indicator (IMHO) of the growth of their consummer products manufacturing. The electronics component of their consumer manufacturing juggarnaut was supported by the smart phone and tablet craze which has been saturated in the last year-- finally making it impossable to hide the economic truth any longer--

Quality of chinese products (especially cutting tools ) has been suspect for may years-- People in the USA and Europe will buy big ticket based on price once or maybe twice but if quality suffers they will buy for quality regardless of price because that is more economical. Witness the auto manufacturing in China---

MalteseFalcon's picture

LOL.  Let's see the FED deal with this.

metaStable's picture

Electricity demand in china is more or less the same YOY. That itself rules out 7% GDP growth. Chinese economy, being mostly export oriented, is a canary in coal mine. If chinese economy is not growing, ditto for US and all other nations with current account deficit.

MalteseFalcon's picture

China is the world's engine. No growth in China, no growth anywhere. If China doesn't buy, all resource nations crash.

Including the precious petroleum states.

reader2010's picture

if you modify the GDP calculation formula to include the contribution to the GDP figures from 100 million sex workers,  including sugar babes,  in China,  I am sure tbe number will be better nonetheless. 

g3h's picture

Our proprietary Synthetic Growth Index?



Zann's picture

Am I the only one wondering how this Synthetic Growth Index calculates -1.1% annual GDP for China? Is that based on Big Macs sold, or what?

CheapBastard's picture

It's ok. Our economy is at least negative 5% real GDP so they're still way ahead.