Economist: China Fudging Its GDP? Yeah Right, Comrade

Tuesday, May 26, 2009 , , , 3 Comments




I remember a time when I enjoyed reading The Economist, and perhaps that is simply because I was tainted with the misguided stink of liberal politics from birth. Oops, was that mean?

I mean to say by that that either extreme, be it Nancy Pelosi riding her broom around San Francisco demanding equal rights for gerbils and minorities alike or Rush Limbaugh lambasting those dirty rotten libtards, is a hazardous distraction from the meat and potatoes of any issue. Sorry to my fellow conservatives if you don't get me on this one - hit me up and I'll be happy to discuss the dangers of extremism with you on a one-on-one basis, lest we waste precious space here blabbering on about it.

Captain Capitalism knows what I'm talking about, as The Economist began its downward slide into extreme leftism some time late last year - just in time for the economic crisis to come to a head! How perfect!

As all of you know I swear by The Economist, but ever since they got a new editor, I sensed it has taken a turn to the left. Global warming is a foregone conclusion, environmentalism takes up precious space that should be used instead on economic/financial issues, and every time I have the time to sit and read through an issue I'm let down more and more by an increasing percentage of the articles I disagree with.


Good, I'm glad I'm not entirely out of my mind or hanging out with too many conservatives these days - wait! I live in San Francisco, I don't have to worry about that since there are only 5 or 6 of us anyway.

I digress. Via the now extreme leftist Economist (it's like freebasing the fumes from Pelosi's broom, I tell you), "The Art of Chinese Massage" (I kid you not) and sorry, kids, but I don't think this one comes with a happy ending:


Part of the recent optimism in world markets rests on the belief that China’s fiscal-stimulus package is boosting its economy and that GDP growth could come close to the government’s target of 8% this year. Some economists, however, suspect that the figures overstate the economy’s true growth rate and that Beijing would report 8% regardless of the truth. Is China cheating?

Economists have long doubted the credibility of Chinese data and it is widely accepted that GDP growth was overstated during the previous two downturns. In 1998-99, during the Asian financial crisis, China’s GDP grew by an average of 7.7%, according to official figures. However, using alternative measures of activity, such as energy production, air travel and imports, Thomas Rawski of the University of Pittsburgh calculated that the growth rate was at best 2%. Other economists reckon that Mr Rawski was too pessimistic. Arthur Kroeber of Dragonomics, a research firm in Beijing, estimates GDP growth was around 5% in 1998-99, for example. The top chart, plotting the official growth rate against estimates by Dragonomics, clearly suggests that some massaging of the government statistics may have gone on. The biggest adjustment seems to have been made in 1989, the year of political protests in Tiananmen Square. Officially, GDP grew by over 4%; Dragonomics reckons it actually declined by 1.5%.

So check it out, here's the issue. Let's make this as simple as possible using real world examples.

Picture it, freshman year in high school. America is the hot, rich, snooty jock who somehow manages to pull straight A's in his advanced physics class even though he's normally too busy giving hot sophomore girls in class "the eye." China is the nerd in the back who lives in a dump with his single father and had to take a job at 14 just to help pay the family's bills.

America always rocks the latest Abercrombie t-shirt (collar flipped up on the polo, of course, because let's face it, America is kind of a douchebag) and gets all the bitches. China, looking on with envy, plugs away hoping to secure a scholarship as it is China's only hope of getting out of poverty. Meanwhile, America is pretty much guaranteed a free ride - even though America's parents are swimming in cash, he'll probably get a football scholarship at a sah-weet 4 year school where he'll keep getting tail and straight A's.

Fast forward to Junior year, China has been slaving away at a shitty sandwich joint since freshman year but has also been putting away the little bit left over from his paychecks that he doesn't have to turn over to his family to help pay the bills. America, meanwhile, has started smoking weed with the other jocks instead of hitting the books, his grades are slipping, and he went from the star of Junior Varsity to a benchwarmer since he's too exhausted from partying to perform well on the field. There goes the scholarship but oh well, at least he's got his parents money.

But wait! Senior year, as America and China are ready to graduate at last and plunge into the unknown abyss of adulthood, America's Dad loses his job. Under extreme financial pressure and trying to raise a douchebag of a teenager who is failing his way through school on his charm alone, his parents decide to get divorced. He is now living in a one-bedroom apartment with his unemployed Dad since his Mom ditched the misbehaving boys for the hot pool boy named Pedro and took the money with her. Awww!

Worse, China was tortured by America all through high school; shoved in the hallway, pantsed in front of that girl he had a huge crush on, and made fun of in the locker room during every single gym class.

Now let's bring it back to the current situation, shall we?

I am immediately drawn to the story of Tim Geithner and President Obama pointing the finger at China to accuse them of manipulating the yuan just about the time the US dollar began its death seizures on the floor of the Federal Reserve. It is as if we are so caught up in our own supremacy that we cannot possibly fathom an America that doesn't have everyone else around the world gripped hard by the balls. So? We slipped! It isn't our country's fault and if we could manage to oust the treasonous dickheads who are selling us down the river to the demon of debt (*ahemBenBernankeI'mtalkingtoyouahem*), we might be able to turn things around before they devolve beyond repair.

But sniffing around China's ass looking for misbehavior isn't going to help us. So The Economist can suck it, I don't buy that they are cooking their GDP nor their currency. Who in the hell are we to accuse China of manipulating its currency?! We are the ones manning the presses like financial crack addicts, not them!

Deal, America. You lost this fight. Maybe not the war but the fight? Done deal, kids. China has their own dirt but this isn't it.

Update: It was brought to my attention (thanks @pasher) that China could very likely be committing the very sins which I am saying are an entirely engineered "concern."

So let me offer yet one more slightly simpler example.

Pot, meet kettle. The United States cooks its books too. Point: China.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

3 comments:

Junior:
Captain Capitalism is over 15 years late. The Economist favors many "leftist" positions and has for at least 15 years. They include: the Palestinians over Israel, a weak US military, the EU over individual European countries, unlimited immigration from the third world into the first, Keynesian economics, affirmative action and gun control. Recently the Economist has attacked Californians for defeating the five tax raising propositions. How dare people not want to tax themselves to support illegal aliens and their progency.
Suppose China is fudging its GDP figures? What does the Economist think every government does? Would John Williams have anything to say if Uncle Sam's statistics were sound?
I began reading US News & World Reports in about 1957 and Newsweek in about 1962. Imagine Newsweek once had Henry Hazlett and Milton Friedman write for it. Now it has Fareed Zakaria. We were recently treated to a cover story on "The Meaning of Michelle", Obama. The major newsweeklies have been reduced to the level of "star" magazines like People and US. It is inconceivable that say Time would write a serious piece like that about the Japanese navy in 1933 today. Or 1949's Flapdoodle.

Krupo said...

But is China bashing a leftist or conservative position? ;)

America loves its celebrities (kings).

Pop,

I didn't mean that it suddenly took a turn to the left out of nowhere but that it plunged into the depths of leftist thought with a jerk some time last year - which is saying quite a bit considering...

And exactly why I linked to John Williams after it was brought to my attention that perhaps my initial point hadn't quite gotten across.

I discussed this with my roommate from Shanghai this evening (we love the "latest on China" exchange some nights - between what her friends "back home" get filtered to them and manage to dig up with what we manage to get filtered through here and what I manage to dig up, I imagine we get 60% of the picture, not so bad) and she was amazed when I told her after all of this preening about "we're cutting America's credit card," China is STILL buying T-bills. It's a joke. You have been right all along, neither side can budge so all they can do is play along.

and who needs Time? Why do *you* write on your site? I don't think I ever asked you that. What drives you to do it? I do it because Time, People, CNN, CNBC, Fox News, MarketWatch, Bloomberg, NYT, WaPo, HuffPo, on and on cannot or will not say the things I do. Surely your motivation, at least in part, must be along those lines.

As for you, Krupo, I don't know if "bashing China" is the issue, I think it's that we need to get real with ourselves and admit that WE too are fudging our numbers. On both sides.

Too much gets lost in the noise of liberals v conservatives. Wrong issue...

Jr