Everybody knew it but it took a while to become official.
In the case of overstated Chinese GDP figures, we now have confirmation from the Chinese state mouthpiece Xinhua that they have been made up for a long period of time, at least on the regional level.
This is just short of the National Audit Office admitting GDP numbers are basically made up. Actually, according to a report by China Daily, the National Audit Office did that as well, but didn’t release the report.
“One county in Liaoning reported annual fiscal revenues 127 percent higher than the actual number,” wrote China Daily.
Xinhua on the other hand quoted an official saying: “If the past data had not been inflated, the current growth figures would not show such a precipitous fall.”
According to China Daily, local officials also manipulated investment figures and overstated them by at least 20 percent in the case of Heilongjiang Province.
They pretended that even unsigned contracts were actual investments, whether real money followed or not.
“The official statistics have deep methodological problems; the departments are under-resourced. But what’s really the key here, is that the GDP number doesn’t really tell you much about growth across the economy,” says Leland Miller of China Beige Book, a research firm that interviews thousands of companies to keep tabs on growth and other metrics.
Well, according to official state media, a lot of that growth across the economy was made up, which is one of the reasons why most investors and analysts also don’t believe the headline figure for the whole country.
“Right now they’ve got an economy which isn’t growing at the 7.0 percent, it’s more like 1 or 2 percent. In Beijing they’re even saying privately 2.2 percent,” says Gordon Chang, author of “The Coming Collapse of China.”
GDP grew at 6.9 percent in the third quarter according to official figures.
Billionaire investor Wilbur Ross looked at actual production and consumption data to make his assessment, rather than just official data:
“The Chinese economy clearly is not growing at anything like 7 percent. We have felt for a couple of years that those figures were very, very generous. If you look at physical indicators—electricity consumption, natural gas consumption, oil consumption, cement consumption, steel consumption, telecom consumption, retails sales—if you look at all those indicators, none of them were growing at a rate that was equal to 7 percent and neither were the exports.”
So how fast is China’s GDP growing after all? Nobody knows for sure, but here are the six best estimates.
