China, Tired Of Manipulating Home Price Data, Suspends It

Once again China shows how it's done. Instead of continuing to issue it vastly manipulated national property price index, the Chinese statistics agency has simply decided to stop publishing this highly regarded (if completely irrelevant) metric. From the WSJ: "China's statistics agency said it will stop publishing the country's much-watched official index of national property prices." The reason: even armed with Moody's GIGO spreadsheets to "calculate" the data and provide "output", the country was unable to mask the surge in property prices, resulting in a build up of popular anger. Alas, this move which is nothing but an act of massive condescension, and is supposed to get unpleasant data "out of sight and out of mind", will achieve precisely the opposite, as one billion Chinese know too well just how rapidly surging Chinese inflation is first hand.

From the WSJ:

The announcement Wednesday, part of a broader revision of property-price data by the National Bureau of Statistics, fueled already widespread frustration and skepticism about the quality and transparency of economic data in the world's second largest economy. It came just a day after the statistics bureau published a lower-than-expected inflation reading based on a revised formula for the consumer-price index that economists criticized as lacking transparency.

The move is likely to make it harder for executives and investors to gauge national trends in China's property sector, a huge driver of its economic growth and of global demand for steel, cement, and other inputs. The statistics bureau was due to announce its monthly estimate of national property-price changes for January on Friday.

The reason for the end of the data series? Shades of the excuse of why the Fed stopped publishing the M3 (reminder: it was too expensive).

The statistics bureau said it was making the changes to improve the quality of its data. The national property-price index has been criticized for understating the severity of the country's property bubble by diluting the large rises in big cities with tamer changes in smaller ones. It will now publish only separate data for the 70 cities that made up the index, and it will use a new method of calculating property prices that only looks at housing, not commercial property.

The anger is already coming:

This week's statistics changes, which come as Chinese consumer and property prices are under intense global scrutiny for signs of inflation and asset-bubble pressures, drew sharp criticism from some analysts.

"It's just like changing the scale of a thermometer, and then telling a patient they no longer need to take medicine for their fever, and the whole family cheers that the illness is cured," Xu Xiaonian, a professor of Economics and Finance at the China-Europe International Business School, said on his personal microblog Wednesday.

For those wondering what the voodoo behind the new "data" is:

The bureau's previous property data series relied on information from a survey of transactions, conducted at a local level. Those transactions were meant to be representative, but the series was widely criticized by analysts and the general public for failing to reflect the sharp increases in housing prices in recent years.

Under the new method, the bureau will instead rely on data from online property registries maintained by local authorities, initially in just 35 cities. The remaining cities will continue to use the survey method but will switch over as they develop their own online property registries.

And don't for a minute think that the US is immune from this: as noted, the Fed cancelled the M3 when it started being inconvenient. Pretty soon the CPI, the PPI, the H.4, the H.3.1, the H.6 the G.19 and who knows what else will also be eliminated. The reason: synergies.