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

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

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


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


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

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

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


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

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

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

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

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


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

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

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

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


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