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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DeadFred's picture

A question for those pretty intelligent people on ZH is How do you distinguish a stockpile of coal caused by people unwilling to report a slowdown and one that is  preparing for the supply disruptions caused by war?

Mitzibitzi's picture

You start shooting at them and see if they are ready to shoot back right away. If it takes them a while, they weren't planning to fuck you, but unfortunately they now are.

Marginal Call's picture

So the ghost towns that they built are really decoy cities and not uber Keynes?  And if they bomb the decoy cities they are safe.  And if they bomb the real ones they move to the decoy ones.  And if they bomb them all they move back to their rice paddys and retire.  Fool proof. 

Mitzibitzi's picture

My reckoning is that the ghost towns, duplicate bridges and new roads that merely created links parallel to existing ones but by a different route were basically just Keynesian follies. But... the Chinese I've met are mostly pretty smart. I'm sure it did occur to someone that having redundant housing / industrial sites, spare transport capacity - and thus more places to hide stuff you don't want bombed - couldn't be a bad thing, if it ever came to it. Plus it keeps the peasants busy and stops them thinking too much about their shitty pay and conditions. And the fact that there ain't enough pussy to go around, thanks to years of 'planned parenthood'.

michael_engineer's picture

Suspect that Chinese ghost cities are mostly hype designed to make the Chinese look crazy productive or crazy strong or crazy like a fox mostly done for some PR spin reasons by somebody. Consider that most new subdivisions look like ghost cities until they are complete and people are allowed to move in. Is there any credible scientific analysis or reporting that can confirm ghost cities of any quantity?

Chernobyl became a ghost city but there was a reason for that.

Seer's picture

In China the govt tells everyone what do to.  In the U.S. it's Wall Street...  and Wall Street, in its infinite way of hiding corruption, decided that the best way to run the scam was to "distribute" risk.

I recall a quote from a former soviet citizen KGB-er that folks in Soviet Russia knew that it was all B.S., but that the U.S. is much more polished and the people don't see it.

Edward Bernays was 100% an American product...

Cognitive Dissonance's picture

May I suggest that it is not an either/or question, but rather a little of both.

It is clear to many, even if not uttered in their out-loud voice, that hard times are coming. Even if they are the root cause of their coming hard times. So they, along with us, prepare for the inevitable.

geoffb's picture

If China is lying to us about its economic output could it possibly be that our military is lying to us about China's military capacity just like they lied about the Soviet Union's or Iraq's?? Things that make you go hmmm.

Mitzibitzi's picture

They certainly spent years bigging-up China's nuclear capabilities. Before the internet came along, we were led to believe, largely by letting us imagine it to be the case by alluding to it in the media, that China had a big arsenal of ICBMs - not as many as Russia, but still a whole hell of a lot. Turns out that wasn't the case at all; they had a few hundred warheads and most of those were on short and intermediate range launchers.

Still plenty for the job, of course. But 'massive arsenal' does a much better job of frightening the plebs into keeping their heads down and putting more power into the hands of government than 'about 30 that have the range to hit us, which may or may not have reliable launch vehicles and guidance systems of dubious accuracy'. Though Clinton changed that last factor, I believe, with his technology transfers - they're probably as accurate as US, UK, French or Russian missiles these days.

geoffb's picture

"letting us imagine it to be the case by alluding to it in the media". This statement sums up the last 30-40 years of this country's political MO. I gave you a plus for that.

Economic capacity is required to make war, and China's only economic capacity is the US. There will never be a war while that's the case and if its ever not the case China would have no reason to wage war on us. Its as big a dead end as the idea of an Iranian war. Just not going to happen. It just a fantasy concocted to keep the military industrial complex relevant and a prime example of the above sentence. IMO, we could cut virtually everything but our Navy, Coast Guard and National Guard and our sovereignty would remain as safe as it is now. (BTW, I'm perfectly ok with the use of aggressive war for protection) Now, our own political and monetary system, that's the real threat to our sovereignty.

mjk0259's picture

Isn't it the other way round? US cannot make an advanced weapons system without Chinese electronics at this point. Might be those electronics contain a way of making planes crash, missiles to be retargeted,etc already. Even the parts that look American made are sometimes counterfeit Chinese ones.

 

blunderdog's picture

Heh heh.  Well, hanging around here you should understand a common 'Merkin attitude. 

If them Chineses ever stop buildin' us our widgets, we'll nuke 'em until they get back to work.

It is speculated that cro-magnon man may have hunted the neanderthals to extinction. 

If that's not the IDEAL basis for a self-fulfilling prophecy, what would be?

Seer's picture

And, would stockpiling contribute to the reasons FOR war?  Haves and Havenots...

At any rate, Australia is going to be squeezed pretty soon.

monkeyboy's picture

It has definitely been getting tighter down under.

Property has been getting smashed. Melbourne clearance rates at all time lows and only worsening with regards to auction clearance rates.

And I still think we ain't seen nothing yet...

Rude awakening in 3, 2, 1...

11b40's picture

War with who?  The very last thing that China wants is a war with us.  Their military would be decimated in about 2 days.  Same with Russia...but proxy more wars are both possible, and many think likely.

The only defense against our air/missle/drone delivery systems is the psychological defense of Mutually Assurred Descruction if things go nuclear.  MAD, as it has been for 60 years.

michael_engineer's picture

With the planet!! The planet has been short changing us on its natural resources recently . The planet has gotten stingy.

11b40's picture

No question we are on a planet with finite resources, and stockpiling certain things makes sense to a degree.  If the world's economy heads into a depression, however, big piles of coal, copper, etc., won't help much.  They will be wishing they had filled silos with grain,and would quickly realize they should have stockpiled more fertilizer.  They have a demand economy and millions of hungry people to feed. When demand collapses, just wait and see what happens in China.  There may be war, but it it could easily be internal. 

Seer's picture

"There may be war, but it it could easily be internal. "

I'd say that most wars are about controlling internal opposition.  One's own population needs to be dealt with by "procuring" needed resources or by forcing them (like people are going to volunteer, regardless of whether it's in their own self-interest to do so!) to reduce their needs/demands.  And, really, the closest threats are really what makes the most sense to attend to...

As H.L. Mencken informed us, govt's primary purpose is to keep us chasing hobgoblins.

laomei's picture

China has more grain reserves than any other country period... seriously, we've got a solid 18+ months in reserve at all times as well as a distribution network for it all that was put into place about 6 years ago.  The vast vast majority of our food is also locally produced.

11b40's picture

'Zat right?  And you know this how?  Official government stats?

I will concede the locally produced part, however.  The peasants toil in the fields much as they always have.  Hard, manual labor is the way of life in the countryside.  Now, however, China has much of the same problem we will have if things blow up.  So many have made the trek from the farm to the cities.  Anything that disrupts the food distribution system quickly becomes a big problem in the cities. 

Add to that the fact that many Chinese devote a large % of their income to food.  Food inflation is one of the greatest fears of both the government and the people, and so is scarcity and famine.  Tell me agian what that one child only policy is all about?

 

mjk0259's picture

China's next expansion will be into any resource containing ocean area they can make any sort of claim. Already in disputes with Japan and Phillipinnes. They don't have to start a war to get control of these areas. They just need enough of a military capability to intimidate their neighbors. They already have that. Also they have considerable economic muscle. For example, they cut off rare earth shipments to Japan when they were having a dispute with them. Unlikely US will intervene at this point. Eventually they will make the surrounding countries vassals that pay them tribute in some form like it used to be.

 

 

Jim in MN's picture

It is an interesting thing to ponder, how the 'tail' of the intelligence curve attempts to manage the middle.  As we approach 10 billion, the ratios hold, but what of the absolute numbers? 

Plus, it sure ain't no fat tail (at the top end). 

Plus, some proportion of the 'smart' are trying to kill us all whether they admit it or not (psychopathic/bad incentives).

Cognitive Dissonance's picture

I don't know about you, but where I am there's nothing but mud. Maybe it's caued by my frequent urination? Mom always warned me to immediately set up a septic system on whatever mud ball I landed on.

<sigh> I guess Mom was right. :>)

Seer's picture

When life serves you mud buy a comfortable pair of boots! (and don't piss about it! :-) )

RockyRacoon's picture

Hey, CD, "rising gold prices" is a false indicator (as is falling gold prices).  Just look at what the Mint sells from month to month.   Price is a delusion.

The U.S. Mint had a sales report. They sold 10,500 ounces of gold eagles...1,500 one-ounce 24K gold buffaloes...and 100,000 silver eagles. Month-to-date the mint has sold 43,000 ounces of gold eagles...7,500 one-ounce 24K gold buffaloes...and 2,075,000 silver eagles.

The U. S. doesn't care what the "citizen" does about gold or silver.  It really is just a metal to them.  Seigniorage and all that.

Cognitive Dissonance's picture

Interesting. I'll feed that to the flying spaghetti monster and see what comes out the other end. ;)

P.S. - I still think flabby fiat is an indicator, but that's just me.

RockyRacoon's picture

The Flying Spaghetti Monster has been busy these days.  Might take Him/Her/It a while to process your request.  I think the RBA banking "delay" has been the latest project.

Anywho, if there were stats on private sector sales of PMs you (and I) would be astounded.  Remember that the Mint is buying by the retail sector who just doesn't know where to go (i.e.: whom to trust) to get their PMs.  All the talk about "We buys yer gold fer the most money" being a harbinger is all wrong.  Offset the purchases by those in-the-know and the motel room sales and we'd find a huge transfer of PMs to the individual.   Again I say, the gov't could give a crap either way.

NumNutt's picture

Government officials telling lies, who would have thought such a thing could happen, thank goodness we live in the USA, our officials would never tell lies. <SARC>

BadKiTTy's picture

The great thing about a good con is that those who are conned are so 'invested' in the BS they have bought. It is far easier to get yourself to believe in the lie than it is to face the truth.

"you want the truth?....... You can't handle the truth!"

Because once we know, really know, it means we have to do something.

Easier to fret over X Factor/America's Got Talent/The Biggest Loser (which is us by the way not the fatties on the box)

just my 2c

K@

engineertheeconomy's picture

Just like all the rest of the countries in the world, every single one racing to the bottom in an attempt to rape, pillage and plunder as much as they can before the sheeple wake up. Wake up sheeple!

Abraxas's picture

Sheeple are awake, but there is a problem that they have to get together to do something. In this world of I and me and mine, it's inconvenient to get together. Besides, there are so many sport events, Holywood movies, cool gadgets and reality shows.

t_kAyk's picture

"Besides, there are so many sport events, Holywood movies, cool gadgets and reality shows."

Part of the reason why they are all still asleep.   

The sheep are not awake, for they choose not to be.  It's very easy to brush off the troubles of the day and go back to your gossip magazine and big gulp because someone else will 'deal with it' or it's all just a 'conspiracy'.  What is difficult is challenging your everyday thought process and asking 'why' or 'what if?'  Shift your paradigm. 

Waking up can be a chaotic and troublesome time in ones life.  You can and will break down, realizing that your entire world, the world that has been constructed around you, is nothing more than a veil - smoke and mirrors.  Nevermind that man behind the curtain! 

If the sheep were really, truly awake then I have to believe we would see a touch more unrest than we have over here in the states.  When the smoke finally clears and all the colors are truly shown it will be too late.  They know this, so they have your bunk turned down and ready at the nearest camp FEMA. 

You are correct in saying that "there is a problem that they have to get together to do something".  Spread the word, prepare, speak truths and hold yourself and everyone around you accountable.  Do what you can and do it now.  It begins and ends with us. 

i-dog's picture

Paradoxically, the sheep should not come together ... they should separate, scatter, act as individuals! It will drive the globalist sheep dogs bananas!!!

If we (each European nation state, each US sovereign state, each 'Trans Pacific Partner', each member of the 'Union for the Mediterranean', etc) were each to go our separate ways for a little while ... then take stock of who owes whom and who can/can't pay ... then re-form such treaties and unions as the people of each state feel are in their interests and with as little centralised overhead as possible (ie. initially without the IMF, World Bank, WHO and WTO protecting the central banks, big pharma, big ag, big oil, etc) ... then we could re-float this sinking ship and move forward with building a new paradigm for the 21st century and beyond.

The old ruling class have spent nearly 200 years carefully and stealthily shepherding all the nation states into this big global ponzi ... yet we could tear it down in just a matter of months, and rebuild over the years ahead, with just a few catalysing states to set the ball rolling!

t_kAyk's picture

Right, I agree with you there.  We must disconnect ourselves from the matrix and let it crumble, but it is something that must be done on a grand scale, which would take some form of large coordinated effort, or at the very least a 'coming together' of ideas. 

Unfortunately so many sheep have been trained to attack those who speak of such.  Prepper!  Conspiracy nut-job!  Even as these people become more and more sick, see there family and friends lose their jobs and homes and discreetly have their freedoms stripped away, they would dare not bite the hand that feeds, the one that is ever reaching further to lul us into a slumber. 

We could do it in a matter of months, but it would take much longer for everyone to wake up. 

i-dog's picture

I believe that America will get its wake up call within just a few more months (I have been predicting on here since early last year that the election will be cancelled and martial law will be imposed in Sep-Oct this year ... and I'm still fairly confident of that prediction - though it will have to be put off to a much later date if the European "Union" falls apart before then).

Interesting times dead ahead!

Seer's picture

"I have been predicting on here since early last year that the election will be cancelled and martial law will be imposed in Sep-Oct this year"

YAWN... I was hearing this same "prediction" for the 2004 election.  Same old party politics rhetoric.

Really, think about it!  TPTB have their candidates, WTF would they need to hold such a coup during such an obvious "people's time?"  TPTB need to continue the illusion that the people are involved in The System; when it's clear that it is no longer the case then TPTB are going to be in for shit and no "declaration" is going to save their asses (their Praetorian Guard won't be there).

i-dog's picture

You appear to be overlooking the objectives of the destruction of America!

If those objectives were simply to hang onto some cushy jobs in DC and funnel more taxpayer dollars into the pockets of some polititicians' familites, then you would be right to yawn. (Or maybe you just need more sleep?!).

If, however, the objective of the old European ruling class (of kings and bishops, in league with a monied aristocracy) is to take charge of the planet under a global government "for the planet's own good", then they must remove the thorn from their side of that "beacon on the hill" that just keeps encouraging innovation and other pesky upstart middle classes elsewhere to aspire to such annoying concepts as individual freedom, democracy, equality of opportunity, and the pursuit of happiness.

I do not see the current situation as simply a natural decline, but rather as a planned reaction to the initial formation of a group of independent-minded states outside the direct control of that ruling class.

I see every landmark political action in the US of the past 220 years -- from the reduction of the Articles of Confederation into a centralist Constitution, through the Civil War and the ensuing stripping of states' rights, to the formation of the FED and the ensuing debasement of the currency leading, finally, to 9-11 and the ensuing stripping of individual rights -- as a continuum with a single objective. The ruling class works on multi-generational (almost geologic!) timescales to ensure survival of their species in what they consider to be their rightful position.

Here is what an insider had to say, nearly 60 years ago, on the planned steps being taken. See if you think that any of them have not come to pass:

1. Greatly expanded government spending for every conceivable means of getting rid of ever larger sums of American money as wastefully as possible.

2. Higher and then much higher taxes.

3. An increasingly unbalanced budget, despite the higher taxes.

4. Wild inflation of our currency.

5. Government controls of prices, wages, and materials, supposedly to combat inflation.

6. Greatly increased socialistic controls over every operation of our economy and every activity of our daily lives This is to be accompanied, naturally and automatically by a correspondingly huge increase in the size of our bureaucracy, and in both the cost and reach of our domestic government.

7. Far more centralization of power in Washington, and the practical elimination of our state lines.

8. The steady advance of federal aid to and control over our educational system, leading to complete federalization of our public education.

9. A constant hammering into the American consciousness of the horror of modern warfare.

10. Consequent willingness of the American people to allow the steps of appeasement by our government, which amount to a piecemeal surrender of the rest of the free world, and of the United States itself.

 

Anyway, we won't have to wait much longer to see who is right. In the meantime, keep on yawning!

Cathartes Aura's picture

"everyone" is never going to "wake up" dude - stop waiting for your herd to turn with you, get on with taking stock, and care, of yourself.

everyone bleating on and on about "the sheeple" and their distractions are also stuck chasing tails in a repetition rut, when action is all that matters at this point.

the "sheeple" will be watching the London "zion" games, and they'll be fretting over not having access to their online bank accounts, and they'll be worrying over the price of gas vs. where to drive for firework games on the 4th. . .

what will YOU be doing?

Mitzibitzi's picture

True on an individual basis, as well. If people and communities started running as many of their own affairs as they practically could, without asking for help or money from above, the 'state' would start to shrivel. They gained power and grew ever bigger by convincing us that we needed them. Time to show them that we don't.

Seer's picture

It's about centralized power, something exhibited also by big corporations.  Though, however, I believe that big corporations would cease without govt propping them up.

Abraxas's picture

In other words we have to come together in deciding we have to go individual. That's what Daniel Quinn suggests in his book "Ishmael". Detach from the system. I'm not sure it's feasible on a grand scale. In an organism there's only one central point of thinking and deciding, otherwise the system collapses. In a human body trillions of cells are working seemingly independently, but only a cluster of cells are "trained" for decision making. If kidneys made their own ways and arms and legs their own, the coordination would be lost. Our problem is that the brain that's leading us is apparently rabid.

i-dog's picture

In fact, the human body is a co-operative collection of organisms, each working in their own self-interest and autonomously. Complex organs can be kept alive simply by passing nutrients (blood) through them. The brain has evolved some regulatory control functions, and our decisions and actions are more rational than those of lesser animals, but most activity within the body is accomplished through decentralised sensors and chemical messaging in which the brain plays no part at all while the body goes about breathing and eating and seeking comfort.

There is much that society could, and should, learn from the self-organising and emergent properties of complex fractal systems like the bodies of ants and humans.

Abraxas's picture

I still say that the "brain" is rabid and needs to be transplanted.

RockyRacoon's picture

So, you're saying that human beings are just portable pleasure palaces.   The groupings of micro-organisms that lived in close proximity symbiotically simply grew an enveloping skin and some mode of transportation.   Right out of some science fiction writer's brain.   I like it!

Abraxas's picture

Reality can be even stranger and more bizzare than that. I like that story too. It's more romantic than materialism.

cbxer55's picture

It's time to watch Invasion Of The Body Snatchers, once again.  ;-)

Seer's picture

Actually, humans are just a means of keeping bacteria alive...  And here is was that WE thought we were the ones running The Show!