Turns Out China IS Lying About Everything

Tyler Durden's picture

In what may come as a shocking surprise to exactly nobody, the next great discovery as more and more layers of the global ponzi onion are exposed, is that China was, in fact, lying about everything. Yes, we know, stunning.

From the NYT:

As the Chinese economy continues to sputter, prominent corporate executives in China and Western economists say there is evidence that local and provincial officials are falsifying economic statistics to disguise the true depth of the troubles.


Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said.

Even that lonely indicator that some, even us, had considered somewhat realistic: electric output, is a mirage.

Electricity production and consumption have been considered a telltale sign of a wide variety of economic activity. They are widely viewed by foreign investors and even some Chinese officials as the gold standard for measuring what is really happening in the country’s economy, because the gathering and reporting of data in China is not considered as reliable as it is in many countries.


But an economist with ties to the agency said that officials had begun making inquiries after detecting signs that electricity numbers may have been overstated.


Another top corporate executive in China with access to electricity grid data from two provinces in east-central China that are centers of heavy industry, Shandong and Jiangsu, said that electricity consumption in both provinces had dropped more than 10 percent in May from a year earlier. Electricity consumption has also fallen in parts of western China. Yet, the economist with ties to the statistical agency said that cities and provinces across the country had reported flat or only slightly rising electricity consumption.

In other words, the chart we showed a month ago showing already collapsing Chinese power production is far, far worse in reality.

So why is everything piece of data out of China a lie (and by implication, why are all talking heads and pundits who preach the China "bull case" full of it)? One simple reason: politics.

Questions about the quality and accuracy of Chinese economic data are longstanding, but the concerns now being raised are unusual. This year is the first time since 1989 that a sharp economic slowdown has coincided with the once-a-decade changeover in the country’s top leadership.


Officials at all levels of government are under pressure to report good economic results to Beijing as they wait for promotions, demotions and transfers to cascade down from Beijing. So narrower and seemingly more obscure measures of economic activity are being falsified, according to the executives and economists.


“The government officials don’t want to see the negative,” so they tell power managers to report usage declines as zero change, said a chief executive in the power sector.

When all is said and done, the reality is that China, which according to idiotic press rumors that resurface every 2 weeks is supposed to bailout, is in a condition that is worse than even where it was after the Lehman collapse:

The question is whether the actual slowdown is even worse. Skewed government data would help explain why prices for commodities like oil, coal and copper fell heavily this spring even though official Chinese statistics show a more modest deceleration in economic activity.


Manipulation of official statistics would also provide a clue why some wholesalers of consumer goods and construction materials say sales are now as dismal as in early 2009.


Studies by Goldman Sachs and other institutions over the years have strongly suggested that Chinese statisticians smooth out the quarterly growth figures, underreporting growth during boom years and overstating growth during economic downturns.


And Chinese officials have raised questions in the past about the reliability of Chinese economic statistics. An American diplomatic cable released by WikiLeaks shows that Li Keqiang, widely expected to become premier of China this autumn, said in 2007 that he regarded China’s broad measures of economic growth as “ ‘man-made’ and therefore unreliable.”

So... let's see here: huge disparity between what is represented and what the reality is... a crucial political election... and a regime that many have accused of misreporting critical data for years (even if others captured media outlets accuse the former of being conspiracy theorists)...

Why... could this possibly mean that every piece of data out of the US is just as made up and just as meaningless? Now that would be truly unpossible.

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reader2010's picture

Easy. Beijing will need to start a war and bomb their own cities into shitty pieces, and restart the building boom all over again. 

Seer's picture

Attempts at perpetual growth on a finite planet will always come to a screeching halt.

More than anything else China displays this OBVIOUS flaw.  I believe that all of the world's "leaders" realize that China's bursting is also THEIR end, as their "growth is THE goal" mantra will show them to be standing naked.  Watch Australia crash as China drastically cuts down on its coal imports.  And, as I've been saying for several years now, Canada is going to take a hit to their real estate market (which has defied all reality up until now) when China busts: lots of students of the rich Chinese will be called back home, thereby creating a flood of open rentals (readers should be able to do the math from here).

Seer's picture

Someone apparently doesn't understand the concepts of finiteness; that or the effects of China's meltdown on Australia and (or) Canada.  Clearly there's a LOT of work to be done...

potlatch's picture

I am not nearly as "invested" as many here are, but for years, I have wondered, why is anyone believing in anything that is happening in China?  It is a totalitarian military state, with a vast propaganda and information control system.


Why was this ever touted as an "investment hotspot"


Always sounded like just another country to pour money into short-term, to only have all the records reset when the state is ultimately collapsed and/or colapses itself.


Chicoms are going to make Madoff look like an honest broker.

reader2010's picture

its been a great 30+ year run. but, saddly, nothing lasts forever.  you aint seen nothin yet. 

Seer's picture

'Why was this ever touted as an "investment hotspot"'

Kind of tells you what the entire premise of "investing" is really about, doesn't it?

Unless based on sustainable practices, NOTHING is going to last.

Madoff was merely an offering.  China is nothing more than a clumsy teenager.  The U.S., as I keep telling my wife (she likes to brag that the Philippines are the bastion of corruption), is where the greatest corruption is to be found, it's where there's the greatest concentration of "wealth." (how the hell can you top "reserve currency status built on NOTHING"?  China is full of amateurs)

moskov's picture

So US credibility is based on what? You can't even fund your own bonds.

What a pathetic joke

mjk0259's picture

Bad as it is, most people want dollars over rubles though.

LudwigVon's picture

Duh, US credibility is based on the fact that they can fund their own bonds. Why the fuck do you think Wilson let the Fed issue banknotes to the citizens? It sets up the necessary node in the circular funding ponzi, while both parties get theirs. What lacks credibility is not the US, or their shit-Treasuries getting a bid, it is the FRN, co-opting the name "dollar," that risks global doubt over time. Get it straight, the trade is not TBT, but PHYZZZZ.

JPM Hater001's picture

"So... It turns out that our lying economists are now accusing their lying economists of lying."

I think 2 negatives = two lying bastards telling the truth about the other lying bastards.

John_Coltrane's picture

So, what you're saying is if a man who is known to always lie tells you, "I'm telling you the truth, the economy is doing great", he must be lying.  But that means he's telling the truth.  Yet he always lies.  Oh, the contiidictions of modern set theory!  In short, he's telling the truth if, and only if, he's lying.

Full disclosure:  I'm short FXI via puts.  So, I trust that the Chinese will always lie-set theory inconsistencies be damned.

They Tried to Steal My Gold's picture

China is the master of rehypothecation - derivatively speaking.....


Colombian Gringo's picture

The real answer is to tune out all politicians. Better yet, hang them all and start over.

vast-dom's picture

no fucking shit the sinkhole of the planet is lying! i welcome the great global purge, but afterwards will there really be much progress? i hope so, but only after this immanent crash.....

XitSam's picture

All your China belong to US! Or is it the other way?

potlatch's picture

Chian is what happens when an entire state functions like teh Goldman Sachs

insanelysane's picture

Fortunately for all of us, Spain and Italy have been giving us the truth and a couple a hundred billion euros is all they need to fix everything.

I am more equal than others's picture

Chinese fortune cookie:  Panda's eat green shoots

Seer's picture

Queue the slaughter (sacrifice) of Pandas...

potlatch's picture

Pandas and the bamboo they eat grow like kudzu if you are not very careful.  Fortunately, no one, absolutely one, destroys common household and landscaping pests, like the US of fuckin A.

Seer's picture

Exactly!  "Solve" the "problem" by introducing a completely different problem!

“The chief cause of problems is solutions.”

- Eric Sevareid

BTW - I'd heard that Kudzu has some pretty good protein content to it.  If I lived in Kudzu country I'd be wielding goats, and teaching cows to browse it... cheap food source.

cocoablini's picture

Economists don't lie. They are flat earth society members who make calculations based on their world view. Its not a science or math its a weirdo club like the Catholic Church. Lying requires them knowing the truth...which is.impossible since they have no.clue what is going on. These guys think a depression is a bad recession. A recession is a business cycle. A depression is a self inflicted collapse of the financial ponzi mechanism. Whoopsie.

potlatch's picture

or, a depression is what it looks and feels like as the ponzi rearranges its dimensions or recollects itself.  There is always that, ya know.  I would be very surprised if things got more out of hand than a simply further conventional war involving ships, planes, troops, etc.



Seer's picture

"Economists" are PAID LIARS, period!  In a world without corruption (not gonna happen- power corrupts!) they'd be providing accurate information on how we're chewing up the planet...

Lost Wages's picture

Financial analysts should stop analyzing all the fake numbers and start drinking tea for the tea leaf prophecies. Results will be more in accordance with reality.

kensdad's picture

In the U.S. we don't falsify, we just "tweak" the economic model to get the desired outcome.  That way the ivory tower economists can sleep at night.

bigwavedave's picture

This is all just B(l)S

King_of_simpletons's picture

I suppose calling another a liar doesn't make one a saint. BLS, Fed, Green Shoots, CPI, PPI, Beige book .............

Cognitive Dissonance's picture

False realities, regardless of how persistently supported, eventually collapse into their own gravity field and create a black hole.

Rising Gold prices and flabby fiat are usually the first indicators of an increasing gravity well distortion.

Beam me up Scotty. The third mud ball from the sun has no intelligent life forms to speak of. :>)

Dr. Engali's picture

I don't know CD.. .. I think there are some pretty intelligent people who frequent the Hedge.

Cognitive Dissonance's picture

Agreed. Now if only we could find the courage to relocate to another mud ball we might have a fighting chance.

Of course......before we left we would need to purge the ship's bilge with chlorine gas to kill the inevitable stowaway sociopathic cockroaches who also dream of greener (mud ball) pastures. :>) 

Bob's picture

Did you see Ratigan's last show yesterday, CD?  I kept thinking CD would really appreciate this

Cognitive Dissonance's picture

I did not. But thanks to that Interwebby thingy I still can.


Bob's picture

Most particularly the "Exit Interview" portion of the show.

Cognitive Dissonance's picture

Just did. It seems there will be more of Dylan Ratigan coming down the pike. Good for him. While his proposed project is a work in progress, and still not fully formed, it seems Dylan feels that action speaks louder than words. Bravo!

I liked the part where he explained that once you understand your goal (even if you don't know how to accomplish it) and you realize that what you're doing now is, or will, prevent you from realizing your goal, then the decision to stop what you are doing now and turn towards your goal is easy. So true.

The Big Lie we are told, one that is hammered home to try and convince us of the futility of trying to change the system, is that since we don't have the way forward figured out to the nth degree, we can't even begin.

I call Bullshit and so does Dylan.


Seer's picture

And Ratigan panders to "veterans."  And, watching the video posted in the other link, he then hands off to one of the biggest fucking liars for the elites out there- Chris Matthews (Hardball*)!

* I stopped watching TV altogether after realizing that Matthews was no more than a wolf in sheep's' clothing, back when he was pretending to not support the ME wars.

Bob's picture

Agreed, Mathews is an insufferably shrill shill for the Dimocrat Party. He's no buddy to Ratigan, I'm sure.

Yeah, vets . . . well, you can't go off on every hypocritical/conflicted/compromised group or you'll soon find yourself in a world of one (yourself), and he won't measure up either. 

Bob's picture

The Big Lie we are told, one that is hammered home to try and convince us of the futility of trying to change the system, is that since we don't have the way forward figured out to the nth degree, we can't even begin.

Or, if changing a hopelessly corrupt system is, for a number of reasons, realistically impossible, we can't do anything about the problems we're expecting "the system" to fix. 

Sure sounded familiar, alright.

Seer's picture

All I can think of is Hitchhikers' Guide to the Galaxy.

I believe the REAL test is survival, and if that is the case then it really is a matter of whether we can figure out how to be sustainable where we are, or whether we should realize that the model is to always be looking to move on to other "worlds," knowing, of course, that we will always trash our current environment, thus requiring relocation.  In either case there's a limit to how many can fit on the "ship" ("ship" being the literal or the figurative, as in the earth).

old naughty's picture

Oh, CD, many have the courage. But, but…

The only survivor of Nostromo in Alien 33 years ago (now why is that number kept popping up) thought she could get away but didn’t.  And now the only survivor of Prometheus thought she should go forward to question the demi-gods (real-ly? ) why they created long ago, and now want to terminate us?

Do we deserve <only> this mud ball, along with the sociopathic cockroaches?

I say no one is likely to get away from this mud ball “Scot”-free.  Ask Ridley, he knows.

Paging Scotty, Spock, Kirk. Help!

Mitzibitzi's picture

Sadly, though, few of them seem to be in positions of great enough influence to change anything of consequence. Or not, yet, anyway. If the idiots that be can avoid blowing up the world for a while, that might change. For damn sure, the bullshit we're doing now isn't working for more than a tiny minority of over-rich assholes and their lapdogs.