China's Brave New Math: 24 Of 28 Provinces Report Higher GDP Than National Average

Tyler Durden's picture

There is a saying that the whole is greater than the sum of its part. This may be true everywhere, except in China, where the total is whatever some goalseek machine decides it is.

We first saw China's flagrant manipulation of data when the nation released its "better than expected" trade "data" two weeks ago. As shown in the chart below, when it comes to the biggest contributor, imports from Hong Kong, it was beyond simply grotesque and had entered the sublimely ridiculous.

 

Then last weekend, following the release of China's official national GDP print of 6.7%, China also released its sequential GDP growth of 1.1% which, when annualized, one got a number of 4.5%.  Just as bad, based on the accumulated quarter-on-quarter data over the last year, annual growth in 1Q was just 6.3% - substantially below the NBS’s 6.7% reading for year-on-year growth.

 

Then over the weekend, China's farcical "data" entered the twilight zone, when 24 of 28 Chinese province-level regions reported GDP that was higher than the national figure of 6.7%.

As China Radio International reports, 28 of 32 Chinese provinces, municipalities and autonomous regions have released their first-quarter GDP growth figures, with Chongqing and the Tibet Autonomous Region taking the lead.

24 of the provincial-level regions reported rates above the national figure of 6.7%, while places like Jilin found themselves at the bottom of the list with a 6.2% growth. Two other provinces in the country's northeast, Liaoning and Heilongjiang, have not revealed their numbers yet as well as central Shanxi. 

 

The immediate spin was even more hilarious: not even stepping for second to appreciate that 85% of provinces "reported" numbers that were greater than the average, a professor Liu Yuanchun at the Renmin University of China said "the figures show the government's stimulus policies are producing results, which signal stable growth."

Actually, what the figures show is that China not only continues to fabricate its data with every passing quarter, but it has gotten to the point where it no longer cares if the data makes no sense at all and the government is exposed lying with every incremental data release.

Considering China once again is desperate to recreate its massive debt-fueled capacity glut, one would think it could afford at least a handful of "data" quality control inespectors to make sure that the presented "data package" is at least modestly believable.

That said, as CRI adds, "China's warming property market is also said to have contributed to the better-than-expected GDP numbers. An earlier survey shows that prices of new homes continued to grow in most Chinese cities, as the country is trying to rid overstock."

That is surely the case if only for a few more months: the problem as we showed last week is that any "growth", is incredible as it may be, is entirely on the back of a record $1 trillion in new loan injections in the first quarter.

 

And since only a portion of these funds have once again entered the economy, the rest have gone on to create the latest and greatest commodity bubble China has ever seen, one we profiled yesterday with this stunning chart showing that, according to Deutsche Bank, the onshore China commodity markets this week traded (conservatively) $350bn notional, a 17x increase on the $20bn notional that traded on Feb 1st 2016 i.e. a month ago (is it coincidence that the notional is about the same as at the peak of the equity frenzy?).

There is a problem for China: while in the past it may have avoided international mainstream media attention, this time it is being immediately called out on its numbers:  As the FT reported earlier today, "China’s total debt rose to a record 237 percent of gross domestic product in the first quarter, far above emerging-market counterparts, raising the risk of a financial crisis or a prolonged slowdown in growth, economists warn. While the absolute size of China’s debt load is a concern, more worrying is the speed at which it has accumulated — Chinese debt was only 148 percent of GDP at the end of 2007."

And while we welcome the MSM's focus to a topic we have been covering since 2012, we would like to make a correction: China's total debt/GDP is not 237%, but instead as we reported back in January, was over 100% higher, or 346%. And since in the subsequent three months, China added another $1 trillion in loans or about 10% of GDP (and who knows how much corporate debt), it is safe to say that as of this moment, China's real total debt/GDP is now well over 350% and rising exponentially fast.

So aside from rigged numbers, a commodity bubble and newly exploding debt creation, everything else is ok with China and all those fears about a Chinese hard landing that were so prevalent 4 months ago can be safely swept away...

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The Alarmist's picture

At last ... Lake Woebegon be found!

Cognitive Dissonance's picture

Yes, but then you add the negative (fudge factor) constant (which changes from month to month) and presto.

bania's picture

Technically if 4 of those provinces are non productive slums the math could be accurate.

knukles's picture

Wait wait wait wait.   Are all the province's numbers weighted equally or by GDP contribution, etc.
For example, if 56 of the 57 states grew at 5% and Rhode Island contracted at 10% then the resultant GDP would still be 5% and everybody still would be ... oh never the fuck mind.
Screwy numbers just happens to people with squinty eyes .....
The funniest thing by the way, is that they all think that we all look alike.

old naughty's picture

so, (one moar) up?

Ha, Ha, Ha,      Ha.

Government needs you to pay taxes's picture

. . . And that's the news from Lake Wobegon, where all the women are strong, allthe men are good looking, and all the children are above average

JamesBond's picture

Fuck that!  In America, all school systems report their overall scores as over the 50%ile!  Chinese just learning from the best...

 

jb

RAT005's picture

Most parents' children are a little better than average.

JamesBond's picture

Thank god school systems use constantly revised standardized achievement tests to account for distributional changes over time.  /sarc/

John Kich's picture

Trump Got It Right Again. This Is the Undeniable Proof...

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?

www.legitorscamreview.com/the-final-bubble

Proofreder's picture

Yes, Lake Wobegon ...

where all the women are strong, all the men are good-looking,

and all the children are above average.

TeamDepends's picture

Chinee Common Core citizenism math, veddy good.

Budnacho's picture

The economy is great Wang, now shut-up and eat your plastic rice

knukles's picture

Prastic lice damnit    You no come Amelican site and sperr long.   Make Mao rook rike idiot rike you. 
Mao take rongest wark witf filst step and you strumpre. 

Budnacho's picture

Sorry knuck's....in that comment I was playing the part of the Greedy Gwai Lo Business owner....I'll try harder next time!....;-)

knukles's picture

Oppps!  My fault!  So solly!

no ita lever's picture

It's a brave new world indeed, some animals are more equal than others! Did I just do a mix and match, sorry!

Miranda:

O wonder!
How many goodly creatures are there here!
How beauteous mankind is! O brave new world,
That has such people in't.

Or was it Shakespear?!

The Pig: It's a big [insert language here] club, and you ain't in it!

YBIC

Goldilocks's picture

meh. it's all relative.

Meghan Trainor - Lips Are Movin
http://www.youtube.com/watch?v=qDc_5zpBj7s (3:04)

Irving Phelps's picture

Kinda like the BLS and non farm payroll bullshit that spews from DC. The Chinks are just trying to keep up with Amerika.

Cautiously Pessimistic's picture

That means 4 unlucky province managers are headed for a BIG DIRT NAP. 

sidiji's picture

Tyler very obviously has never visited China...go visit Chongqing

coast's picture

IN YOUR BRA!!!  (jim carey, liar liar, when he asked the big boob chick how much she weighed)...if ya havnt seen the movie then never mind.

FreeShitter's picture

This is a case for the old saying horry fuck!

GeoffreyT's picture

There are two points to be made regarding this article:

(1) it is entirely possible for the majority of a data series to be above/below its average, so this in and of itself is unremarkable - and trying to turn it into a 'gotcha!' to makes clear that the author is a statistical ignoramus and/or is relying on statistical ignorance in his audience (anyone who has ever heard of 'skewness' should be able to generate a set of numbers where 24 out of 28 are above or below the mean);

(2) the 'external balance' (Exports - Imports) component of province-level 'GDP' is a definitional nightmare. Ask yourself: does the net exports component of province-level GDP include inter-province trade? If final goods go from Guandong to Shenzhen, are they Guandong 'Exports' and Shenzhen 'Imports'? If not, why not?

If (2) includes inter-province trade in the 'net exports' component of province-level GDP, then the national GDP growth rate is no longer equal to the province-level-GDP-weighted sum of province-level GDP growth rates. Anyone who has finished year a decent quant-based economics syllabus ought to be able to convince themselves of this by constructing a 2-province stylised model. Here's a hint: inter-province trade balances can move in the exact opposite direction to the national-level trade balance.

Also... the three provinces not included in the province-level data (but included in the national-level data) - Liaoning, Heilongjiang, and Shanxi - taken together comprise about 7% of Chinese GDP.

Lastly - but by no means leastly: what does the bar chart by province purport to show?

As an example of what I mean by that, take the number in the barchart for Guandong: 17,272.24... is that the level, the per capita level, the change in the level? It bears no relationship whatsoever to

(a) the 2014 level of Guangdong GDP in RMB (6,779,224); or

(b) the 2014 level of Guangdong GDP per capita in RMB (67,897)...

And 17,272 is not 7.3% of either of those quantities, either.

I suspect that the author hasn't looked at English-language versions of the data.

Emergency Ward's picture

The Central Planners will not be happy until all provinces report above average numbers.

DCon's picture

me fail English?

 

That's unpossible

 

 

Paul John Smith's picture

The Chinese CCP leaders are doing everything the FED does but worse ... makes me wonder if they are buying gold at all ... that being said "China taking over the world?" - HA!

(no one is taking over the world)

(the world is about to be in charge for a while)

(and I don't mean the "UN")

(reality is back in the driver's seat)

(reality is a vicious bitch)

mr.Parsifal's picture

Let's do some math here

 

Chinese debt was only 148 percent of GDP at the end of 2007

China’s total debt rose to a record 237 percent of gross domestic product in the first quarter of 2016

 

that would mean that over the past 10 years the Chinese debt grew at 6,24% YoY, thats pretty consistant with its GDP growth

 

so it seems, debt = growth

*minus savings and imports