Wikileaks Disses Chinese GDP Stats

[Joanne98]

We’ve harrumphed more than occasionally on the dubious quality of Chinese official releases (see discussions on GDP, inflation, and other drive-by-data-shootings for a selection of past grumblings).

So we are delighted to see that Wikileaks is on this beat too. (hat tip the Pragmatic Capitalist, courtesy reader Arthur K). From a March 2007 cable on a discussion between Clark T. Randt and “Fifth Generation Star Li Kequiang”:

¶1. (C) Liaoning Party Secretary Li Keqiang, a front runner for elevation to the Politburo this fall and potential successor to President Hu Jintao in 2012, described the challenges he faces as a provincial leader to the Ambassador over dinner on March 12. Engaging and well-informed, Li related that despite brisk economic growth, Liaoning’s income gaps remain severe. To create a “harmonious society,” he has tried to guarantee minimum living standards by providing new housing to the destitute and a job to every household. The public is dissatisfied with education, health care and housing, but it is corruption that truly incenses them…..

¶4. (C) GDP figures are “man-made” and therefore unreliable, Li said. When evaluating Liaoning’s economy, he focuses on three figures:
1) electricity consumption, which was up 10 percent in Liaoning last year;
2) volume of rail cargo, which is fairly accurate because fees are charged for each unit of weight; and
3) amount of loans disbursed, which also tends to be accurate given the interest fees charged.

By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are “for reference only,” he said smiling.”

This Wikileaks release, like so many others, is not news to anyone who has been on this beat. For instance, Foreign Policy had a 2009 feature article entitled “How China Cooks Its Books”. Some extracts:

In February, local Chinese Labor Ministry officials came to “help” with massive layoffs at an electronics factory in Guangdong province, China. The owner of the factory felt nervous having government officials there, but kept his mouth shut. Who was he to complain that the officials were breaking the law by interfering with the firings, he added. They were the law! And they ordered him to offer his workers what seemed like a pretty good deal: Accept the layoff and receive the legal severance package, or “resign” and get an even larger upfront payment….

Such open-secret programs, writ large, help China manipulate its unemployment rate, because workers who “resign” don’t count toward that number. The government estimates that roughly 20 million migrant factory workers have lost their jobs since the downturn started. But, with “resignations” included, the number is likely closer to 40 million or 50 million, according to estimates made by Yiping Huang, chief Asia economist for Citigroup. That is the same size as Germany’s entire work force. China similarly distorts everything from its GDP to retail sales figures to production activity. This sort of number-padding isn’t just unethical, it’s also dangerous: The push to develop rosy economic data could actually lead China’s economy over the cliff….

http://www.nakedcapitalism.com/2010/12/wikileaks-disses-chinese-gdp-stats.html

[somone]

1. High-quality data from China

is as good as their high-quality products

[Ghost Dog]

2. The "GDP figures are “man-made”" comment is universally applicable.

But of course your US corporate brainwash media chooses to spin such Chinese technical honesty this way.

[jtuck004]

3. +1

[Ghost Dog]

4. Thanks.

I'm from Yorkshire.

[jtuck004]

5. I don't think people realize how phony or manipulated much of what

they see really is.

There is incredible artistry in these numbers - and when you deflate one set because of politics, you can't avoid
deflating another just because of arrogance.

The facts on the ground are that we are still importing a LOT more from them than they buy from us, we
have destroyed our own industrial job base, and we aren't investing in our people or our country.

So while we quibble over two-sided arguments, the oligarchy continues to rake in profits.

We are gonna get what we deserve.