A Chinese puzzle as everyone's a winner

The Daily Telegraph ^ | February 7, 2003 | Richard Spencer

[MadIvan]

The puzzling nature of Chinese economics has been highlighted by a study showing that all 31 provinces beat the national average growth rate last year.

According to the National Bureau of Statistics, China posted an impressive eight per cent growth in gross domestic product, hailed as a beacon of hope in a world dogged by fears of recession.

But official returns from local governments, monitored by the financial services agency Bloomberg, show that every one, from Tibet in the south-west to Tianjin in the north-east, beat even that impressive figure.

The reliability of Chinese statistics has long been debated by financial analysts, particularly when the economic boom officially escaped the effects of the 1998 Asian financial crisis despite widespread redundancies.

China has an unusual combination of high growth, the world's second highest foreign currency reserves, deflation and a falling currency.

This is partly the result of mixing free market economics and authoritarian politics, which sets artificial interest rates and pegs the currency to the dollar.

But it is clear that the NBS has struggled to cope with communist officialdom's tradition of currying favour by exaggerating achievements.

The NBS has attempted to improve monitoring and no longer reports annual figures before the end of the year to which they apply.

[MadIvan]

Investing in China is foolish; markets only work with good information, and this is apparently not happening.

Regards, Ivan

[MadIvan]

Bump!

[Hank Rearden]

"And every child is above average"
- some boring leftist.

[AntiGuv]

My guess: The tens of billions of deficit dollars which the central government invests into infrastructure development and institutional solvency are probably counted toward provincial growth rates, but subtracted from nationwide growth rates. Not an especially dubious means of accounting, but certainly not the convention employed by the U.S., East Asia, and Western Europe.

[Poohbah]

China = Enron + Nukes