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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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Sat, 06/23/2012 - 15:47 | 2554366 Cathartes Aura
Cathartes Aura's picture

mmmmm. . . "self organising". . . "emergent properties". . . complex fractal systems". . .


must remember to pack the Terence McKenna books, they'll be heady re-reading when things get un-plugged.

Sat, 06/23/2012 - 10:02 | 2553487 insanelysane
insanelysane's picture


Sat, 06/23/2012 - 10:33 | 2553548 RECISION
RECISION's picture

I'm shocked, shocked I tell you...

Sat, 06/23/2012 - 10:06 | 2553493 t_kAyk
t_kAyk's picture

China helps us out by purchasing all those cute Obama Volts.  Beijing is pleased because they can then mandate that if you drive it must be a Volt.  Electricity sales green.  Volt orders through the roof.  Both economies saved. 

Nobel Prize, please!!! 


Sat, 06/23/2012 - 13:07 | 2553869 sessinpo
sessinpo's picture

That is doable under the Buick brand. In China, Buick is a luxury brand, even more so then Cadillac

Sat, 06/23/2012 - 18:06 | 2554643 laomei
laomei's picture

Sure.. like back in the 90s.  Practically no one buys the US shit anymore.  Of all the massive communities around here, I can count the total number of US makes on one hand.

Sun, 06/24/2012 - 10:13 | 2555494 11b40
11b40's picture

You need to get around more.  I saw lot's of American autos in Guanzhou, Zibo, Qingdao, & Beijing.

Looks like the Chinese propaganda machine is monitoring us again.

Sat, 06/23/2012 - 10:07 | 2553494 Pretorian
Pretorian's picture

Bring EU down or there will be no one to purchase US deficit. Save heaven.

Sat, 06/23/2012 - 10:08 | 2553496 The Gooch
The Gooch's picture

chU. S. A.!  chU. S. A.!

Sat, 06/23/2012 - 10:09 | 2553498 yellowsub
yellowsub's picture

Funny, reports in the US have been manipulating data since 2008.  the NAR was manipulating sales since 2005... 

So can you really trust whatever report is out there saying our economy is doing better when everything else says otherwise?

They're all in on it.

Sat, 06/23/2012 - 10:09 | 2553499 Bastiat009
Bastiat009's picture

China is not buying gold?

Sat, 06/23/2012 - 10:34 | 2553550 tmosley
tmosley's picture

Now there is an interesting idea.  One shouldn't disbelieve a liar only when convenient, or when it backs up your own biases.  I wonder about the veracity of those numbers now as well.

Sat, 06/23/2012 - 10:11 | 2553502 JohnKozac
JohnKozac's picture

I suspected China was having problems when I read Australia exports plunging to The Middle Kingdom and Australian house prices (and sales) start to correct as defaults soar as the kangaroos woke up to reality.

It's not going to be pretty.

Sat, 06/23/2012 - 11:02 | 2553590 11b40
11b40's picture

The Canton Fair in Guangzhou is probably the largest Trade Show in the world.  It is immense, and takes place in 3 segments for various consumer products.  I can only speak for the segment I attended in late April, but traffic was way down, which means that factory orders are down substantially as well.  As every salesman knows, if they aren't there, you can't sell them.

I also visited several factories in Shandong Province, most around Zibo & Qingdao.  No question that factory activity is curtailed...and that lead times for production are shortening, a clear indication that factories have less to do.

China is totally dependent on foreign demand.  Anyone counting on them being the engine that re-starts the world's economies is headed for a big disappointment.  Kind of like the hoax of 'Supply Side Economics'.  Without those factory orders from the U.S. & Europe, their downward spiral will be more dramatic than ours, in my humble opinion, and the problems they will face with a restless and hungry population dwarfs the ones we have coming.  It's all about demand, as it hhas always been. 

Yes, there are pockets of wealth, and a growing middle class, but the average Chinese has a tenuous grip on the gains made over the past 15-20 years.  When rising expectations meet the new reality of declining opportunity, watch out.  Already, the riots have started but been larely ignored by the media.  The trend line is down, and over the past 60 days, pulling orders out of retailer's has been like pulling teeth.  Fear is creeping back into the board rooms of the major retail community, with budgets tightening and decisions being delayed as long as possible.  It feels like what happened in 2008-2009.  The can may be kicked again, but every time it is, it has to be kicked harder and doesn't go as far.

Sat, 06/23/2012 - 13:25 | 2553926 Jay Gould Esq.
Jay Gould Esq.'s picture

Interesting observations; a very good exposition.


Sat, 06/23/2012 - 10:16 | 2553507 bugs_
bugs_'s picture

The sky is high and the emperor is far away.

Sat, 06/23/2012 - 15:34 | 2554325 Seer
Seer's picture

Make the pie higher!

Sat, 06/23/2012 - 10:16 | 2553509 hivekiller
hivekiller's picture

Ya mean that commies lie? Naw tell me it aint so, so I can go on lovin dear leader.

Sat, 06/23/2012 - 13:11 | 2553881 sessinpo
sessinpo's picture

I don't think that lying has any thing to do with being commie. The list of leaders that don't lie of any political or economic model is much shorter then the list of liers.

Sat, 06/23/2012 - 10:16 | 2553510 Jim in MN
Jim in MN's picture

As I've been saying for years, we won't know if the Chinese economy breaks until we see the smoke rising from the cities on the satellite photos. 

Sat, 06/23/2012 - 11:19 | 2553643 Matt
Matt's picture

Or rather, when we can see the cities from space due to the sudden lack of smog.

Sat, 06/23/2012 - 11:28 | 2553661 Benjamin Glutton
Benjamin Glutton's picture

so you're saying Chinese leadership needs a good proxy war to avoid smoking cities?



Syria alone wont do,imo.

Sat, 06/23/2012 - 15:36 | 2554339 Seer
Seer's picture

You mean the great "non-communist" "intelligence" agencies in the West won't be able to tell us in advance? </sarc>  Nothing like paying WAY more and getting the same fucking results!

Sat, 06/23/2012 - 10:18 | 2553514 Cupid Stunt
Cupid Stunt's picture

Bullish...... right ?

Bullshit......right ?

Sat, 06/23/2012 - 10:20 | 2553517 phyregold
phyregold's picture


Wait we are fudging our numbers ?

We're not China! We're not China! We're not China!

Sat, 06/23/2012 - 10:21 | 2553519 pacu44
pacu44's picture

I would like to see that chart over 50 years...

Sat, 06/23/2012 - 15:37 | 2554343 Seer
Seer's picture

Sure!  Just read it verryyy s l o w l y ...

Sat, 06/23/2012 - 10:25 | 2553526 RoadKill
RoadKill's picture

Someone needs to send this to that fuck Simon on CNBC.  Yesterday he was BERATING a guest that suggested weak oil prices suggested the global economy was slowing - and he cited China as growing 7%-8% as his backup, saying oil demand was still growing so IT HAS TO BE SPECULATORS driving down the price".


I know Ill get junked for even watching CNBC, but if I had a direct line to Simon, Bob Pissani and Rick Santelli, I'd feed them the factual articles like this and leave out the conspiratorialist, PM Bug BS that makes this website look lunatic fringe.  Can't argue with numbers.

Sat, 06/23/2012 - 15:46 | 2554364 Seer
Seer's picture

"and leave out the conspiratorialist, PM Bug BS that makes this website look lunatic fringe. "

And... yet here you are.

I don't know why people feel so compelled to "tell it to power."  Power KNOWS what's up because it's IN power!  (CNBC IS [as is the case with all lamestream media] TPTB)  Turn your back on it, or run and hide under its skirt.  Pick your side and go forward...

Sat, 06/23/2012 - 16:11 | 2554406 Ineverslice
Ineverslice's picture

Turn it off mate. They will gone sooner than later.

Sat, 06/23/2012 - 18:41 | 2554693 ThisIsBob
ThisIsBob's picture

Just a bunch of tele prompter reading wannabes who have never sweated a drawdown in their lives telling you how it is.  Right.

Sat, 06/23/2012 - 10:25 | 2553529 beentheredonethat
beentheredonethat's picture

Guided by the general principles of Marxism-Leninism, perhaps they should undergo a period of self-criticism 

Sat, 06/23/2012 - 10:26 | 2553530 monad
monad's picture

Ayn Rand meant to warn us, not provide instructions to the dbags. This is the San Sebastian line playing out...

Sat, 06/23/2012 - 10:28 | 2553532 phyregold
phyregold's picture

Am I the only sheeple that remembers that the hardcore drop in oil prices precluded the crash of 2008?

Then the dollar soared (which is why I might be the only zh that is holding off on gold (not silver)). Because of the euro breaks up and the economies collapse at the same time (probable) and in the fact that oil will be down greatly even more. Gold will plumett and that's when I'll buy

Sat, 06/23/2012 - 10:28 | 2553535 q99x2
q99x2's picture

Tesla knew his mother died even though he was in America and she was in Croatia. I sensed the Chinese were lying all along. Truth is a relative form of communication and its value may be derived from many sources.

Sat, 06/23/2012 - 11:26 | 2553657 Mitzibitzi
Mitzibitzi's picture

True that. When my Mum called me to tell me Dad had died, I knew what she was going to say as soon as the phone rang and I saw her number. I'd had the strangest feeling that something was wrong with the world for about 40 minutes before the call.

I don't consider myself especially spiritual or anything, but that day made me wonder if there's more to the world than we see everyday.

Sat, 06/23/2012 - 15:56 | 2554379 Seer
Seer's picture

"that day made me wonder if there's more to the world than we see everyday"

Our senses are pitiful when compared to other animals.  Seeing is only a small world (I say this even though I AM Seer!): can only imagine what my dog senses as it roams around my property.

Since everything that transmits does so via energy I'd have to say that "energy" was responsible for what you experienced.  I'm not into all that paranormal kind of stuff, but I believe that there's a bit of evidence out there suggesting that people are able to communicate over long distances w/o speech (or visual aid).  Religion and all that is just an attempt to describe that which cannot be described: and people don't get the irony in that!

Sat, 06/23/2012 - 10:28 | 2553536 Redhotfill
Redhotfill's picture

Keynesian trained statisticians,  if the stats dont show what you want spend more till they do.

Sat, 06/23/2012 - 10:29 | 2553537 ThisIsBob
ThisIsBob's picture

So what's happening with US electricity production?

Sat, 06/23/2012 - 11:29 | 2553670 Mitzibitzi
Mitzibitzi's picture

If everything you read on the 'net about the state of US electrical infrastructure is even halfway true, then you mustn't be pushing it very hard - cos it's still working. If not very well, in some areas.

Sat, 06/23/2012 - 14:21 | 2553836 Bob
Bob's picture

Flat since 2008, dramatically bucking the longterm trend:

Oil-based energy (ex-military) is significantly down as well. 


Sat, 06/23/2012 - 10:30 | 2553539 TrainWreck1
TrainWreck1's picture

China drove all their customers out of business (with Wall Street's full encouragement)

We are all broke now, and can't afford any more of their crap.

Sat, 06/23/2012 - 16:02 | 2554393 Seer
Seer's picture

It's GROWTH that we can't afford anymore!

TPTB don't want this game to end as it's how they make their living!  They're in full propaganda mode trying to soften the blows: always look to save your ass by creating distractions, by utilizing the divide and conquer approach (make us all beat up one another).

Sat, 06/23/2012 - 10:35 | 2553552 apberusdisvet
apberusdisvet's picture

The new Millenia economic course load (recommended):


Year 1:  Creative Obfuscation 101

Year 2:  The Virtues of Central Planning

Year 3:  Mathematics and propaganda; a coalescence for modern economics

Year 4:  Lobbying for government grants

Sat, 06/23/2012 - 16:04 | 2554401 Seer
Seer's picture

Year 5: How to "successfully" pitch "growth is good for you" (while the masses starve)

Sat, 06/23/2012 - 11:03 | 2553555 shovelhead
shovelhead's picture

The Chinese are more centralized.

We have the the Dept. Of Bullshittery and the Dept. Of Batshittery to derive data sets .

One knows they're lying, the other are Keynesian Krugmanites.

Sat, 06/23/2012 - 10:39 | 2553560 reader2010
reader2010's picture

Plastic Rice tastes Better and has more nutrition. That's a true lie.


Sat, 06/23/2012 - 10:45 | 2553572 geewhiz190
geewhiz190's picture

china has been hemorraging currency reserves for months as those who are able are trying to get as much money out of the country as possible as soon as possible. the notion that the renminbi will somehow replace the dollar as a reserve currency any time soon isn't supported by exchange flows.  meanwhile unfunded dollar liabilties outside the US have ballooned in the last several years while the US has far outpaced the rest of the over-levergaed world in de-leveraging. these imbalances  favor a much stronger dollar as the world is essentially short the buck big time. global currencies have all begun to fall at varying rates relative to the dollar. some have crashed, like the rupiah in indonesia and the indian rupee. PG, MO have already warned of the effects of the stronger dollar-more will follow. with China's debt to gdp ratio probably in the vicinity of 160% and the china dependant aussies and brazilians in trouble, look for the dollar to go much higher.

Sat, 06/23/2012 - 10:47 | 2553573 netpounder
netpounder's picture

They can both lie all they want.  In the end, he who has the bigger guns can tell a bigger lie.  Try confronting them with truth by speaking into the barrel of a gun.  Or big gun against bigger gun.

Sat, 06/23/2012 - 10:49 | 2553580 phat ho
phat ho's picture

Possibly the chinese will take advantage of this global slowdown and to switch to their internal market to resume growth albeit at a much different pace (sneaky bastards...)

Sat, 06/23/2012 - 16:21 | 2554429 Seer
Seer's picture

Do you realize how pathetic this sounds?  That is, the statement that growth can all occur on its own, internally.  China doesn't have the energy!  I've been stressing this point for a LONG time now, that those countries that don't have resources are FUCKED (Germany, Japan, China, UK, India etc.): the U.S. does have resources, it's its consumption rate that makes it look more like a resource-deficient country (meaning, it's no better off unless it can get consumption down- HINT: increasing consumption when you're needing to IMPORT resources is a BAD equation!)

Sat, 06/23/2012 - 17:10 | 2554520 mjk0259
mjk0259's picture

China could get most of it's energy from nuclear like France does. No worries about environmentalists there. They will also get substantial oil and gas from nearby ocean areas and the Stan's. Who would stop them if they invaded Kazakhstan?


Sat, 06/23/2012 - 19:22 | 2554757 Marginal Call
Marginal Call's picture


Sat, 06/23/2012 - 10:49 | 2553582 blindman
Sat, 06/23/2012 - 10:53 | 2553588 phat ho
phat ho's picture

....and possibly approaching polar shift in world finance center, previously being london, now new york, next (gasp) Beijing???

Sat, 06/23/2012 - 10:55 | 2553592 nmewn
nmewn's picture

The communists are lying???...ROTFL-MAO!!!

Stop the

Sat, 06/23/2012 - 11:53 | 2553726 falak pema
falak pema's picture

They are no longer called commies, they are called right honourable central planned social market economy business partners! And GWB loved them at Olympics. 

Apple loves them and Walmart loves them and the whole US family loves them. WIth so much love floating around they cannot be called commies. That would make americans commie lovers. Great balls of fire! 

Sat, 06/23/2012 - 11:59 | 2553739 Bobbyrib
Bobbyrib's picture

Next thing you know we'll be signing free trade agreements with Vietnam. /sarcasm.

Sat, 06/23/2012 - 11:05 | 2553624 adr
adr's picture

I can tell you that things in China are terrible, because I produce products there. Making iPads by the millions may help Foxconn, but the manufacturing output of half the world was relocated to China. Not every factory can make iPads.

Textile factories are desperate for business. The problem is there isn't enough business for all of them, and the business there is wants better pricing. Imagine someone wanting better pricing on something they pay $1 for that ends up selling for $50 at a mall retailer. Vietnam, Cambodia, and other asian countries are offering better pricing for textiles.

The Chinese staples of toy production and shoes production are also being outsourced. This is leaving many Chinese factories with declining orders. The factories are eating each other offering massive discounts and smaller minimums. Short run production will kill a Chinese factory already running on razor thin margins. A factory in China requires huge production runs to purchase raw materials in bulk at a low enough price to eke out a few cents per unit.

Many people don't realize how overpriced merchandise is in the USA. The $150 pair of Jordans was bought from a Chinese factory for under $10. A $80 pair of pants, bought for less than $5. Your $30 toaster, produce for about $3, AND YOU WONDER WHY IT BREAKS WITHIN A MONTH.

It is all because the Wall Street ponzi supported by the publicly traded con corporation must continue at all cost. The decimation of American factory was not done to actually cut cost as much as it was to enable the con of inventory stuffing to show massive revenue growth for publicly traded retailers. Sure cutting cost was the result, but imagine if you could now purchase ten units for the cost of one unit before, and still sell the product fo the same price. You could now produce 10x the inventory without changing your bottom line. If you could figure out how to ship the extra inventory, you could show massive revenue growth. Massive revenue growth would cause your stock to skyrocket, granting yourself shares would cause your net worth to skyrocket. The age of the channel stuffing stock scam began.

This type of thing had always gone on, but it was the exception fo the most part. In the later half of the 1980s it became the go to business method for many companies and took on a whole new meaning in the 1990s. Does anyone ever wonder how the big box explosion of the 1990s was possible? Also the giant mall explosion of the same time period. If you are going to stuff the retail channel with 10x the inventory, you need 10x the space to sell it.

In the 1980s a shoe company started with the explicit pupose of being run as a stock scam. They produced $100 million in wholesale inventory, made in one of the first Chinese footwear factories, using borrowed money. The quality of the shoes were poor, and they were direct copies of a very popular shoe at the time. However, what this company could do was deliver. They waited for an opening,when the big brand couldn't meet demand because of US production. When the stores got angry because they had customers demanding product, the copycat swooped in. They could deliver as much product as the stores needed.

The thing was, if a store wanted 20 pairs, the shoe comapny shipped 40. When questioned the company said, just take them and pay for them when they sell. What, I can take 40 pairs and pay for them when they sell? Needless to say that went over very well. Reps were paid on shoes shipped, so they shipped to stoes that weren't even open anymore. They shipped shoes to hardware stores, supermarkets, wherever.

The company didn't care because they marked shipped shoes as sold, generating massive amounts of revenue. Profit? You don't need profit when you are growing as fast as this company was. They went to $1 billion in sales in a year and a half. The buzz aroun this comapny was huge, the stock soared making investors rich. All the while the CEO was cashing out. When shoes that didn't sell came back, they were marked as losses in the advertising and promotions department. Nobody would question hundreds of millions being spent to support a fast growing brand.

Two years later the company was virtually bankrupt but still hung on for a couple more years with a little hype. The CEO cashed out to the tune of a few hundred million, left the company as a dead man walking, and sold of the brand name. The reps who were flying high, now had no job and massive bills to pay.

The CEO went on to start another footwear company and run the scam all over again. But this time he would be smarter, he would runthe scam using his own stores.

This model was adopted by just about every corproation over the next 20 years.

Sat, 06/23/2012 - 11:35 | 2553683 Mitzibitzi
Mitzibitzi's picture

I'd heard that story but not in so much detail regarding how it worked. Thanks.

Sat, 06/23/2012 - 12:59 | 2553849 My Days Are Get...
My Days Are Getting Fewer's picture

Very well stated.

Abolish the acrrual method of accounting.

Put all goverments and corporations on a "cash in cash out" basis - just like real people.

Sat, 06/23/2012 - 13:08 | 2553873 Jack Sheet
Jack Sheet's picture

Great post, thanks.

Sat, 06/23/2012 - 16:33 | 2554447 Seer
Seer's picture

The increased "costs" are cycled in to the defense coffers to manage oil prices.  One way or another the price is paid; the problem is is that we've clouded things so much that we really have no idea what the true costs are.

I'd come to suggest to all the anti-Wal-Mart folks that the China model won't hold because of energy: if "consumers" spend more on energy (as a percentage of their shrinking revenue stream) then consumer product imports will drop.

Sat, 06/23/2012 - 17:38 | 2554587 old naughty
old naughty's picture


well said.

I have always said that chimerica is a two-headed beast; two heads looking at different direction, but on the same body.

Ponzi has many dimensions. They were into simulation models by monster computers before execution; while muppets enjoyed low-cost channel-stuffed products, or stock gains off ipo's. Ping-pon-zi.

Karma is a bitch.


Sat, 06/23/2012 - 18:23 | 2554670 emersonreturn
emersonreturn's picture

adr: +1.  thank you

Sat, 06/23/2012 - 22:48 | 2555032 billsykes
billsykes's picture

Yeh channel stuffing. Yeh Transfer pricing. Yeh directors fees. Yeh Collusion and price fixing.

(done that a couple times on a PE portfolio company, heh heh.)


Next up I would want to try dev recap/IPO.

(good post btw)

Sat, 06/23/2012 - 11:26 | 2553639 slewie the pi-rat
slewie the pi-rat's picture

china's been the good cop to the US bad cop for a pretty long time...

this is one propaganda faucet;  there are several

in this version, china is all fuked up

in the version yesterday, they are forming another currency agreement to avoid the dollar and put an end to US and USDollar hegemony

the there is the brics news and how the growth and economic engines must be the gorwth and economic engines

and then there is the stuff about Ts and them selling them or was that buying more?

they just bought the LME! why?  b'c somebody lost it in a card game, probably...

and that HK exchange is rilly rilly all abpout the phyzzz;  it hasta be b/c the banksters say it is!  oh!  and the gold touts too!  so it must be true!  they are buying hand-over-fist and soon will own it all!  and force the world onto a gold standard, and:  we'll have noMoMoney!   riiiiight...

remember a short time back when china was getting to be so middle-class that they would now be offshoring their mfg and industry?  so they could do moConsuming?  like us?  kinda like  industrial revolution evolution?

altho this was alleged to have already started, none of those brainiacs who pretend to know how things work seem to have had the thought:  if china starts off-shoring production, won't their electric usage go down?  at least in the short run? 

and then there is andyW ...   don't get me started...

the macro seems to indicate commodity deflation;  this will increase gross margins in the strong corprations which have pricing power and can hold it to the fools in the retail distribution channels thru branding/packaging/mktg propaganda and the indices they power should do ok for now

but then the demographics may be indicate that the "debt is good" propaganda has done its wonders, so what's the use in borrow&buy?  why invest?  why work?

now, we're talkin, BiCheZ!

look! a roach!

Sat, 06/23/2012 - 11:20 | 2553646 Pasadena Phil
Pasadena Phil's picture

@adr Sat, 06/23/2012 - 11:05 | 2553624

Great comment. I've had friends out there going back to the early 1990s who predicted that so long as the Red Army continued to pull the strings from behind the veneer that is the Chinese government, this latest "Great Leap" forward would end in a train wreck.

I have a friend who was sent to China in 1990 on a US government team to explore investing opportunities for American companies. Their conclusion was that there were certain Red Army-connected interests who were monopolizing all ideas (so they couldn't compete against each other) and strangled the investment process by demanding to make all decisions at every step of the way. Never mind that there is no contract law nor civil rights to fall back on should local partners fail to fulfill their end of the contract.

There are always Red Army officials lurking one layer behind the veneer out there which is why there is so much fear. The story of what happened to the CEO of Apex is a cautionary tale to how little "ownership" there really is in China.

Sat, 06/23/2012 - 16:41 | 2554457 Seer
Seer's picture

LOL!  Like it's really any fucking different in the "model" that is the U.S.?

Keep pushing the GROWTH button and it'll all generate this same fucking mess, don't matter whether some "Red Army" is lurking or not.  It's the fucking PROCESS (of endless growth), it's the SYSTEM.

"Give me control of a nation's money
and I care not who makes the laws."

- Mayer Amschel Rothschild

Chinese were handed the hand-grenade that is capitalism and now they're totally fucked (well, not like Communism was going to do otherwise, but capitalism is MUCH more efficient at exhausting resources).

Sat, 06/23/2012 - 11:31 | 2553676 Bansters-in-my-...
Bansters-in-my- feces's picture

Let me start by saying who the fuck would believe the bullshit lies and deciet from "western economist" and "prominant corporate executives" from China at that....

Too fucking funny.

Believe none of what yo hear and half of what you see.


I am being heavily spray by chemtrails again today.

If you see these trails in the sky from jets that linger they are NOT contrails.

You owe it to your mother,brother,sister,and friends to bring it to thier attention if they do not know.....!!!

Stop by Chemtrail dot com......

This is for real folks...!!!!!

Wake up PLEASE...!!!!!!!!!!!!...Look up....

Sat, 06/23/2012 - 11:52 | 2553725 Mitzibitzi
Mitzibitzi's picture

I'm bothered a little by persistent contrails, too, especially as I live within the airspace of 2 big airports. But where I'm dubious is that IF there is some kind of chemical spraying going on for the usual conspiracy theorist reasons; it's taking it's own sweet time to achieve anything. After ~30 years of it, you'd think there'd be more of an effect. If it were me doing it, I'd have plumped for something rather faster acting. Turning kerosene into noise with hundreds (and let's be honest, there'd have to be thousands, if it was happening worldwide) of aircraft is an expensive business if it takes 30-odd years to acheive it's intended result.

IF I were to buy into the chemtrail theory, I'd be more inclined to believe that the intent is merely to create cloud cover - which around here it does, I have to admit; you can watch a blue sky turn into haze in a couple of hours as the contrails spread out to cover it. For what purpose, I don't know. It's not having any great impact on crop growth; stuff is still coming out the ground all over. I don't buy the 'stupidity by aluminum ingestion' theory; there are easier ways to dumb down a population - TV for one, a whole array of chemicals you could add to the water supply for another. So what's the purpose? There something up there that they don't want us to see? UFOs? Increasing the effectiveness of HAARP?

So, anyway, I guess I'm concerned but until I read an explanation for it that makes more sense than any of the science fiction you mostly read on the Internet, I class it as of rather less importance than the apparent imminent collapse of the entire global economy.

Sat, 06/23/2012 - 13:20 | 2553905 el Gallinazo
el Gallinazo's picture

Anyone want real facts about how this geoengineering project is killing the fucking planet, listen to this one hour interview with retired USDA crop assessor Rosalind Petterson.  Ms. Petterson could make Sergeant Joe Friday smile with just the facts m'am, meticulously recorded.  She proves with FAA records that in her area of CA, the trails are produced strictly by miltary aircraft from military bases.


Sat, 06/23/2012 - 16:50 | 2554478 Seer
Seer's picture

Aerial dispersants aren't very precise, I don't know why people persist with this...  Unless, it's about trying to alter the biosphere to offset something that is being kept hidden (that's of a potential mass-disaster).  Well, I suppose that TPTB could be secretly inoculated, though I'm thinking that TPTB aren't all that well coordinated.

I suggest that people focus on what's happening on the ground.  But that's just my thinking...

Sat, 06/23/2012 - 11:49 | 2553715 falak pema
falak pema's picture

you mean Jamie Dimon is a Chinaman?

Who would have believed that! 

Sat, 06/23/2012 - 11:50 | 2553720 orangegeek
orangegeek's picture

Communist countries don't lie....right?



Sat, 06/23/2012 - 11:51 | 2553722 RobotTrader
RobotTrader's picture

Does that mean China is liquidating gold and buying US Treasuries for protection?


Does this mean that more money flees out of FXI and piles into US blue chip stocks the rest of the year?

Sat, 06/23/2012 - 12:11 | 2553755 Tom Green Swedish
Tom Green Swedish's picture

Turning off the lights to save money.  The poor are getting squeezed big time in China too.

Sat, 06/23/2012 - 12:11 | 2553756 George Orwell
George Orwell's picture

China is not going to collapse.  You people are applying US concepts such as "bad loans" and "write downs" and "mortgage defaults" to a country with a command economy.  It doesn't work that way in China.  The empty buildings can continue to stand empty, the loans used in its construction will never be paid back.  And that's not a problem in China because that loan is a form of government stimulus spending.  Not a private loan that has to be paid back.


There will be no rating downgrades or mark to market on those loans.   It's a command economy!  Think about it.  Government wants builders to build to keep people employed.  So local governments and businessmen "borrow" money to build.  The money is created when the loan is created.  If the loan defaults it doesn't matter because that is what the government wants.  Spending to keep employment high.


Capitalism doesn't work the way you think it does over there.




Sat, 06/23/2012 - 12:15 | 2553763 reader2010
reader2010's picture

The Party and the members will continue to FUCK the rest of the Chinese society like there is no tomorrow till the end of time. BTFD!

Sat, 06/23/2012 - 12:46 | 2553813 De minimus
De minimus's picture

Or until they kill us. Which has been the objective.

Sat, 06/23/2012 - 13:15 | 2553894 sessinpo
sessinpo's picture

Sounds familar. Oh yea, before the collapse of the Soviet Union. Everyone is subject to market forces eventually, capitalistic or not. It's just a matter of when the charade falls apart.

Sat, 06/23/2012 - 13:18 | 2553897 Jack Sheet
Jack Sheet's picture

@ George Orwell
Until the banks fail - unless all the capital flight reports out of China are fairy tales. What you are describing corresponds to the centrally planned USSR in the 80s. The internal purchasing power of all their currencies was dogshit. OK, China may currently have more to sell to the West than the USSR did, but it won't last.

Sat, 06/23/2012 - 13:23 | 2553919 michael_engineer
michael_engineer's picture

And even the economists over here don't understand how capitalism works in our own back yards. What if the inputs to the Chinese economy slows over time? What if the inputs to the european or American economies slow over time? Slow downs occur is my guess.

Sat, 06/23/2012 - 15:36 | 2554337 geewhiz190
geewhiz190's picture

i distinctly remember a managing director at Solomon Brothers saying that same thing almost word for word to me about Japan in 1989-at Nikkei Dow 39,000. my guess is china is in even worse shape. the japanese people stayed loyal to the government, i'm not so sure things will be as smooth in china if the country becomes unglued.

Sat, 06/23/2012 - 15:59 | 2554387 curmudgery
curmudgery's picture

the only difference is the number of wash and rinse cycles. china's version, following hallowed tradition, cuts off needless corners.

Sat, 06/23/2012 - 16:08 | 2554403 jonjon831983
jonjon831983's picture

Hmm with unlimited "undefaultable" loans, wouldn't it eventually mean unlimited inflation?  Sooner or later you'd have to pull funds from somewhere to buy inputs.

If you can internally generate required inputs like metals and fuel you may be in better shape though, but anytime you need to go outside of your country for supplies you would need to have something to offer in exchange.

Sat, 06/23/2012 - 16:58 | 2554489 Seer
Seer's picture

You're missing a VERY important component - PHYSICAL REALITY!  It takes ENERGY to keep the modern wheels rolling, and if everyone's broke and needs energy themselves then China is going to be left out in the cold, "Command Economy" or otherwise.

I haven't stated it in a while, but now's a good time to pitch it again: Economies of Scale in Reverse! there are only three states, expanding, contracting, and steady; steady is only a transitory state between the other two states; clearly if things are NOT growing then they are, or soon will be, contracting- what economies of scale did for growth it'll do for contraction- think about parabolas...

If "growth" continues to be the mantra of TPTB then EXPECT war (no other way to perk up per capita resource availability).

Sun, 06/24/2012 - 05:47 | 2555311 Lebensphilosoph
Lebensphilosoph's picture

If China got rid of currency altogether for all but purposes of importation and exportation and all its citizens became explicit slaves of the state, sure.

Sat, 06/23/2012 - 13:27 | 2553934 kevinearick
kevinearick's picture

amplify the outer symptom and Pavlov the cause, for monitary prison.

Sat, 06/23/2012 - 13:33 | 2553951 deboomer
deboomer's picture

How is this different than how the US has changed it's way of measuring inflation and unemployment, there by altering the misery index?

Or, the Fed adjusting every number for "improvements"?

Sat, 06/23/2012 - 13:55 | 2554008 CustomersMan
CustomersMan's picture


It's always bothered me how so, so many experts and global citizens have feared China's growth., as though they could "learn all they need to know about capitalism" in a few  short decades,..and produce a juggernaut without all the concomitant problems that every other country rising to power has had.


Did people really think they would go from Communism to Capitalism and avoid all the pitfalls that have occurred to every other country seeking capitalist leadership?


It can't be done. And the people they are competing against have much more experience than they do.

Sat, 06/23/2012 - 17:07 | 2554513 Seer
Seer's picture

It's about CONTROL.

"Did people really think they would go from Communism to Capitalism and avoid all the pitfalls that have occurred to every other country seeking capitalist leadership?"

"It can't be done. And the people they are competing against have much more experience than they do."

Are you saying they shouldn't try to out-compete that which has shown to be clear failures?, that they're incompetent in achieving incompetence at the levels that the big capitalist nations have achieved?

Anyone trying to judge effectiveness w/o discussing the premise of perpetual growth that all seems founded on, well... FAIL.

Sat, 06/23/2012 - 14:30 | 2554122 LarryDavis
LarryDavis's picture

I wonder if they employ Goldman in this practice or at least consult them.


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.

Sat, 06/23/2012 - 14:35 | 2554147 moskov
moskov's picture

Another fearmongering piece of garbage. Can't stand Zerohedge getting high on this

Sat, 06/23/2012 - 15:16 | 2554289 John_Coltrane
John_Coltrane's picture

The one positive for the collasping world economy is that we can live without Iphones a lot better than the Chinese can do without imported food or oil.  Crisis do help to focus the mind on priorities.

Sat, 06/23/2012 - 17:10 | 2554519 Seer
Seer's picture

Most Chinese have the rural country to return to, AND, they're not generations removed from subsistence farming (which = SUSTAINABLE).  Folks in the US rely on a FAR larger centralized system than most understand.

Sat, 06/23/2012 - 16:03 | 2554396 jonjon831983
jonjon831983's picture

"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."


Ahem: "When it becomes serious, you have to lie."

Sat, 06/23/2012 - 16:11 | 2554407 jonjon831983
jonjon831983's picture

I like the tying in of the election cycles.  Mirror image of power, yes/no?

Sat, 06/23/2012 - 16:49 | 2554476 earleflorida
earleflorida's picture

'unpossible'     classic ZH :D

Sat, 06/23/2012 - 17:23 | 2554551 chinaboy
chinaboy's picture

Electricity production will rise in summer. However, so far this has not happened. In world's largest coal port in northern China, American coal has been piling up to the design capacity. China coal, the country's 2nd largest coal producer, postponded salary pay day. Emplyee's took 10% pay cut in April. Rumors going that there will be another 10% pay cut. Looks that the pay grades are floating. But the situation is really bad.

Sat, 06/23/2012 - 17:45 | 2554607 laomei
laomei's picture

Too bad most of this article is bullshit and the NYT is lying (again).

6% increase in stockpiles at the largest depot during a period of calling coal prices and hardballing the hell out of international trading partners.  Yep, sounds like about the right thing to do.


Energy usage GROWTH dropping?  A lion's share of it is used by metal processing, which is down considerably recently.  This industry contributes a very small sliver to the GDP however, so it's not really that huge of an issue to be quite honest. Notice that word though? GROWTH.  Not using less, just less growth of it overall.  We're also in the middle of a very significant push for energy efficiency where subsidies are being stripped from industry.


So... once again, it's some bullshit about China that only looks at a fraction of the data and ignores the rest of it for the sake of writing an eye catching story.

Sat, 06/23/2012 - 17:56 | 2554628 laomei
laomei's picture

Here's the other battle that's been going on:


Our prices are regulated and strictly controlled... this is a good thing.  Power plants don't like it and have been cutting back to save on costs.  Reforms like this will get it back on track either with consumers paying more based on usage or using less to stay within the bounds.  Meh, works for me... but doesn't really work for those who want to run around like chickens with their heads cut off screaming doom.

Sun, 06/24/2012 - 05:50 | 2555314 Lebensphilosoph
Lebensphilosoph's picture

I see it didn't take long for the Commie government propagandist to crawl out of the woodwork.

Sat, 06/23/2012 - 17:54 | 2554621 robertocarlos
robertocarlos's picture

Dude, their lips were moving.

Sat, 06/23/2012 - 18:13 | 2554654 robertocarlos
robertocarlos's picture

I wanted to read the Chinese girls ad on the left but all I got was an ad that tells me I'm "too beaucoup".

Sat, 06/23/2012 - 18:24 | 2554673 laomei
laomei's picture

Your internet has ads? adblock... seriously... use it. it makes the internet so much more enjoyable.

Sat, 06/23/2012 - 19:38 | 2554781 blunderdog
blunderdog's picture

Whip it out and she'll change her mind.  Just like in the movies.

Sat, 06/23/2012 - 19:11 | 2554741 Itch
Itch's picture

No system is immune from human stupidity.

Sun, 06/24/2012 - 05:49 | 2555312 Lebensphilosoph
Lebensphilosoph's picture

All systems to regulate life are products of human stupidity.

Sat, 06/23/2012 - 21:32 | 2554943 billsykes
billsykes's picture

China lying, just like the USA has/does is unfathomable. (sarcastic)

But what you cannot deny is that China, the communist country is spending more money on securing external assets purchases than the USA.

Cannot turn a corner without hitting a Chinese in Africa, they are creating huge good-will with their infrastructure projects, at the same time buying up natural resource concessions like mad.

Sure they are probably as broke or more than the usa but China owns overseas assets and is accounting for their future, the usa is not.
A big broke country is a lot different than a broke company, I think many at ZH don't fully appreciate this. The dynamics are different.





Sun, 06/24/2012 - 05:54 | 2555315 Lebensphilosoph
Lebensphilosoph's picture

Give them enough years of dealing with Africans and they'll quickly learn why Europeans eventually gave up.


Whatever they think they own down in Africa is not worth the paper it is printed on.

Sat, 06/23/2012 - 22:26 | 2555024 cdude
cdude's picture

 I'm shocked, shocked to find that gambling is going on in here! 

Sun, 06/24/2012 - 05:32 | 2555303 savagegoose
savagegoose's picture

hey they could stockpile piles of FRS notes or coal , id go for the piles of coal to.

Sun, 06/24/2012 - 08:50 | 2555389 Composter
Composter's picture

China is consuming less/ fewer energy resources ?

That's not entirely bad news - more for the rest of us.

Sun, 06/24/2012 - 10:28 | 2555529 Rockfish
Rockfish's picture

Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas 

While we (US, West) accumulate record stting mountains of debt. Hmm boy are they fucked. 

Sun, 06/24/2012 - 11:57 | 2555786 roadhazard
roadhazard's picture

So I guess this means we'll be getting some jobs back...



Sun, 06/24/2012 - 12:44 | 2555880 Grand Supercycle
Grand Supercycle's picture

DOW weekly chart shows uncertain market & fluctuating consensus with likely bullish pattern contained within megaphone wedge.

Sun, 06/24/2012 - 13:21 | 2555958 42
42's picture

Fortunately such manipulation is not allowed : in god we trust and god says that thou shall not lie.....

Mon, 06/25/2012 - 02:02 | 2557027 Me_Myself_and_I
Me_Myself_and_I's picture

This kind of thing is why I will never fear Chinese military expansion.  This cultural idiom of taking the practice of CYA to a holy extreme .. is just fatal for any effort attempting forcible expansion with like-armed foes.

Guns don't fire?  Hold them up anyway and shout 'bang'!

Need to do a flanking maneuver?  "flanking maneuvers are not my responsibility".

Their more likely to implode from environmental destruction anyway, given this course.  I hope to god it doesn't happen.


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