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Jun 26

Is China faking economic recovery?

Written by guest on Friday, June 26th, 2009 at 3:15 pm
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I found this story on an Indian newspaper based out of Mumbai, DNA (Daily News and Analysis) on how the GDP of China, as announced by the country is fabricated and the actual GDP is much lower. They have quoted Albert Edwards, chief global strategist, Societe Generale and International Energy Agency (IEA) to come to such a conclusion. Here is the full exerpt on the story

Venkatesan Vembu / DNA

Hong Kong: Cynical crunchers of statistical data believe there are three degrees of ‘mistruths’: lies, damned lies and statistics.

Increasingly, economy watchers are beginning to believe falsehood could go a step beyond: China’s GDP numbers. Ever since the official Chinese statistical agency announced earlier this year that the country’s GDP grew 6.1% in the first quarter of 2009, there have been murmurs of scepticism about the authenticity of those figures. A few have observed that the GDP data are inconsistent with other data, such as weak power production.

Those murmurs have in recent weeks turned into a high-decibel chorus that is beginning to openly rubbish the validity of the official numbers.

“The Q1 6.1% GDP outturn is simply a lie,” notes Albert Edwards, chief global strategist, Societe Generale. “It helps explain why the Chinese data is derided by so many economic commentators.”

Commodity prices worldwide have surged in recent weeks on the hopes of a robust V-shaped revival in the Chinese economy. But Edwards, who had rightly called the Malaysian economic crisis of 1997 and the dotcom bust of 2000, believes that “to the extent that the renewed surge in commodities and the metals and mining sectors are based on the Chinese growth miracle, the markets are relying on a combination of hype, lies and wishful thinking.”

Edwards isn’t alone in questioning the validity of the official data. Last month, the International Energy Agency (IEA) observed that China’s first-quarter GDP data “does not tally with oil demand data, which contracted by 3.5% year on year.” One explanation for this, IEA analysts reasoned, “is simply that real GDP data are not accurate, and therefore should not be taken at face value.”

Simultaneously, analysts at Lombard Street Research, a London-based economic consultancy, too argued that the 6.1% GDP growth figure was inconsistent with the 20% decline in trade volumes over the same period, because it would have required domestic demand to expand by 9% in real terms. Using official nominal annual growth rates for GDP and consumption for the first quarter, and consumer and fixed investment price indices as deflators for consumer spending and investment, respectively, Lombard analysts claimed that domestic demand expanded at most by 2% year on year in real terms.

They therefore concluded that real GDP growth in the first quarter was probably slightly negative or nil at best, and even in the fourth quarter of 2008, real growth was likely negative or flat. “If so, the last two quarters would effectively signal, from a Chinese perspective, a recession of a rare magnitude.”

China’s official statistical agency, the National Bureau of Statistics, responded to IEA’s scepticism with a stern rap on the knuckles. “It is regrettable that the point of view in the… article is groundless,” a notice on its website said.

“We believe that, for an international organisation, this approach lacks seriousness.””
Even economists who point to anecdotal evidence of China’s recovery concede that interpreting official Chinese data is problematic.

“Trying to understand China’s GDP data is always a nightmare for professional China economists,” observes Credit Suisse chief regional economist Dong Tao. “Since I joined this industry 14 years ago, I’ve had this trouble, I still have this trouble, and I suspect I will continue to have this trouble.”

He points out that there is abundant anecdotal evidence of a “phenomenal improvement” in China’s economy over the previous quarter too. “Go to restaurants, talk to real estate agents, count the number of shipping containers at terminals, see the number of cars being sold… I believe in my eyes.”

The plain-speaking Edwards, however, argues that “if the bubble of belief in China’s medium-term growth prospects finally bursts, it will have huge investment implications.”

It is all too easy, he reckons, for investors to buy into “beguiling growth stories, which are in fact utter nonsense.” He concedes that China’s mammoth 4 trillion yuan stimulus has had a beneficial effect on economic activity this year, but says that he still questions the “quaint notion the markets now seem to have that the Chinese economy can grow at a respectable rate when the rest of the world is in a deep recession.”

The “bullish group think on China is just as vulnerable to massive disappointment as any other extreme of bubble nonsense I have seen over the last two decades,” says Edwards. “The fall to earth will be equally shocking.”

Now the questions to be raised here are:
1> Why would China do it? To project themselves as the new economic centre of the world?
2> Does it do more harm than good? Considering economic decisions involve a lot of speculation… if trade has picked up because of these figures doesn’t it do good for the world economy?
3> It is okay for a country (assuming this report to be true) to project false figures to prevent people from panicking?


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47 Responses to “Is China faking economic recovery?”

  1. Shane9219 Says:

    @Balu

    Here comes again, another political conspiracy theory from our “good” neighbor India :-)

    India’s proud elitists, unsatisfied of their own poor image, are a sure market for recycles of outdated western junks.

  2. | Balu | Says:

    Hello Shane,
    Not a single Indian has been quoted in the story. Why crucify India when we should be trying to find if the story holds any truth or not? Ideally it should be the media of the country which should be doing the interrogation. But since Chinese media is fully controlled by the govt, nothing of this sort, truth or false, ever comes out.

  3. raventhorn4000 Says:

    Balu,

    “Independent media” is full of mass self-delusions of future predictions. Tech Bubble, Dot com bubble, housing bubble, and need we even go back to the original Wall Street Stock Market crash, missed by all the analysts?

    They have a longer history of recycling economic statistics and lies.

    Truth has never come out from any of that “interrogation”.

  4. Shane9219 Says:

    @Balu

    You just need to browse this most recent report from Bloomberg to get your own opinion. As for reports from India’s ‘free” press, I always have to ask my Indian friends to tell me which one is a true story, a recycled rumor or a fantasy :-)

    http://www.bloomberg.com/apps/news?pid=20670001&sid=a5k7aoWxTVzA

    ““It looks like the real economic recovery is beginning,” said Paul Cavey, an economist with Macquarie Securities in Hong Kong. “Things are looking quite promising.

    JPMorgan Chase & Co. raised today its forecast for China’s growth this year to 7.8 percent from a previous estimate of 7.2 percent. “

  5. | Balu | Says:

    @Shane @Raventhorn
    Sorry, but my point wasn’t to question China’s growth. I have three questions which were more worthy of discussion.
    PS: Sorry, me too got carried away in the earlier comment. =)

  6. raventhorn4000 Says:

    Re: the Malaysian economic crisis, people seem to forget that It was China’s monetary policies that buttressed and halted the Asian currency crisis.

    1 controlled press beats all the nay sayers.

  7. raventhorn4000 Says:

    Balu,

    all 3 of your questions presume that China lied on its statistics.

    Those are the sort of Tabloid journalism from the West that even Westerners have gotten quite sick of, akin to the question to a celebrity of “Why would you beat your own kids?”, ie. asking for bad intent without proof of facts.

    These 3 questions are not questions, but accusations.

    My analogous 3 questions for you:

    (1) why would you lie?
    (2) Do your lies do more harm than good?
    (3) Is it OK for you to lie?

    My point is not to insult you, but to prove a point, that your questions are not questions at all, but accusations.

  8. S.K. Cheung Says:

    To R4000:
    ““Independent media” is full of mass self-delusions of future predictions.”
    — but the media only reports on those predictions. If the analysts were wrong with the predictions, surely that’s not the media’s fault. But it’s certainly nice to have variety in media, and each individual can make their own choice as to which media to read, and which analysts to believe. In China’s case, the media reports one narrative, and one alone: the government’s. Luckily, with the internet, the government has less of a monopoly on information, give or take the GFW, and maybe Green Dam.

  9. raventhorn4000 Says:

    SKC,

    “— but the media only reports on those predictions. If the analysts were wrong with the predictions, surely that’s not the media’s fault.”

    Funny how the “free media” rarely report accurate analysts. Ignorance is no excuse for more ignorance. Still self-delusion.

    “But it’s certainly nice to have variety in media, and each individual can make their own choice as to which media to read, and which analysts to believe. In China’s case, the media reports one narrative, and one alone: the government’s. Luckily, with the internet, the government has less of a monopoly on information, give or take the GFW, and maybe Green Dam.”

    Funny variety rarely bring in accurate predictions. Is variety of many delusions helpful?? If you just want to be deluded, Great that you have 20 different ways to be deluded, must be comforting to know that you have “choice” in the kind of opium you want for yourself to get high.

    1 narrative at least does not present a fake “choice”, and accurate enough to predict the last 20 years of economic boom.

  10. S.K. Cheung Says:

    “1 narrative at least does not present a fake “choice”, and accurate enough to predict the last 20 years of economic boom.”
    —no, 1 narrative represents no choice; not a “fake choice”. Our media rarely reports on accurate analysts because there aren’t very many such analysts. If there was such an analyst with such an awesome crystal ball, do you honestly think that our media would ignore him/her? Maybe you buy newspapers who report on people who predict incorrectly; but I would definitely buy newspapers who report on people who predict the future accurately. And how do you attach ignorance to an inability to predict the future? Who’s being delusional, exactly?

    China’s certainly done well in the last 30 years. And Deng deserves credit for opening up etc. He may have hoped for the results we have since seen, but I doubt even he would have predicted it, aside from empty bravado and rhetoric.

  11. raventhorn4000 Says:

    Nope, your choice is a fake choice, as you obviously admitted a lack of choice (there aren’t very many such analysts).

    There were plenty of accurate analysts, your media simply refused to accept unfavored opinions.

    You obviously bought into that whole massive delusion, since you didn’t even know about the accurate predictions.

    There were analysts on Wall Street who predicted the problems with the Housing market and subprime loans. Media ignored them.

    “I doubt even he would have predicted it, aside from empty bravado and rhetoric.”

    His faith in China is a more accurate prediction than your faith in your media. You have nothing accurate other than your “empty bravado and rhetoric” about your “choice”!!

    :)

  12. | Balu | Says:

    @raventhorn4000
    Media never ignored the predictions on Housing market and subprime loans. Heard of Paul Krugman. Read his columns in NYTimes in the past two years.

  13. raventhorn4000 Says:

    I think the bubble was popped before 2 years ago.

    Housing price began declining in some US states in 2005. That’s 4 years ago.

    I like to give Paul Krugman his credit, but I think Media did ignore him for a long time.

  14. Steve Says:

    Uhh… Paul Krugman IS media. He’s a regular columnist for the NY Times and makes frequent appearances on numerous political talk shows. His editorials are heavily syndicated in newspapers. It’d be pretty difficult to ignore him.

  15. raventhorn4000 Says:

    Paul Krugman is an analyst. I don’t see anything about his predictions of the Bubble 4 years ago, (if he actually made any prediction at that time.)

  16. S.K. Cheung Says:

    To R4000:
    “Nope, your choice is a fake choice, as you obviously admitted a lack of choice (there aren’t very many such analysts).”
    —dude, the “choice” we’re talking about is the choice of media. We have it; China doesn’t. The lack of accurate analysts simply goes to show that the availability of people with crystal balls was the limiting step, and not the media.

    “There were plenty of accurate analysts, your media simply refused to accept unfavored opinions.”
    —if there were, then clearly there was enough coverage for you to know about it. So what’s your complaint?

    “since you didn’t even know about the accurate predictions.”
    —and since you apparently did, then good on you for having chosen the better media outlet; i’ll try to find the better one next time.

    “His faith in China is a more accurate prediction than your faith in your media.”
    —faith and predictions don’t mix for me; never was a believer in that whole Armageddon business.

  17. raventhorn4000 Says:

    SKC,

    Dude, I don’t care how many channels you have. that has nothing to do with the INFORMATION!

    You have people who had accurate predictions, Your media blocked them! So much for “freedom of speech”!!

    “—if there were, then clearly there was enough coverage for you to know about it. So what’s your complaint?”

    Not from Western Media. You apparently didn’t have any “freedom of speech” from the accurate voices.

    “—faith and predictions don’t mix for me; never was a believer in that whole Armageddon business.”

    Faith and predictions is all you have about “democracy”.

    :)

  18. Shane9219 Says:

    Forget those abstract GDP and PMI numbers, just look at the real number from GM China.

    “GM vehicle sales in China soar”

    http://www.google.com/hostednews/afp/article/ALeqM5hTgiNUcEe_-ofdXRHbQhpD_COBwA

    “The iconic but struggling US automaker reported its joint ventures sold 814,442 vehicles in China in the first half of 2009, up 38 percent from the same period last year.

    “China’s vehicle market continued to outpace most expectations for growth,” GM China Group President Kevin Wale said in a statement.

    “The market benefited from stimulus policies adopted by the Chinese government as well as growing demand for personal transportation in tier-three and tier-four cities and rural areas.”

  19. S.K. Cheung Says:

    “You have people who had accurate predictions, Your media blocked them!”
    —oh, please, at least tell me you have evidence that certain analysts were muzzled by the media. Cuz an upstanding guy like you wouldn’t go around making stuff up now, would you?

  20. Steve Says:

    @ R4K #15: Krugman is a Nobel winner, a university professor, and Op Ed columnist and book author. Of course he’s an analyst. It’d be pretty difficult to win a Nobel if he didn’t analyze anything. Sure seems like “media” to everyone but you. And yes, he called the housing market a “bubble” a few years ago. Just because you don’t know something happened doesn’t mean it didn’t happen. I’ve been reading the guy in the NYT for the last ten years. He was all over Greenspan and the Bush economic policies from the very beginning of his administration.

  21. raventhorn4000 Says:

    SKC,

    I’m going to discuss “evidence” with you, you would not understand what that would mean.

    You have already admitted that you are not here for any serious comments. So, this is the answer you are getting.

    :)

  22. S.K. Cheung Says:

    Suit yourself, pal. But the adult, respectable, and self-respecting thing to do would be to just say that you have no such evidence, if in fact you don’t have any.

  23. raventhorn4000 Says:

    SKC,

    You have already admitted that you are only here for your “fun”. Why does that make my refusal to talk serious with you my lack of “evidence”?

    Come back when you grow up. :)

  24. S.K. Cheung Says:

    To R4000:
    I’ve said it before. I’m here to learn, from those capable of teaching me. Otherwise, I’m here also for amusement. You’ve proven yourself extremely adept at providing the latter; if you want to have a go at providing some fodder for the former, then by all means please do. But as I said, suit yourself. In the meantime, if you could spare us statements like “You have people who had accurate predictions, Your media blocked them!” unless you had some proof, that’d be grand.

  25. Allen Says:

    I don’t think China is faking.

    Even if China were – what’s the big deal? The “truth” would eventually get out – China’s image would be hurt more than if she had simply admitted the “truth” … there is really nothing permanent to be gained. It’s not like China needs more foreign investments now.

  26. wuming Says:

    I think it is more likely that the actual size of the Chinese economy, if not the the current growth rate, is vastly under-estimated.

    Since statistics ranks so low via popular cliches, I will start with something anecdotal. My brother ordered an electric shaver part from taubao.com, the shipping cost was 10RMB. The part was delivered next day to the door by a motorcycle messenger. If we disregard the efficiency of the operation, the cost of overnight delivery (from Shanghai tom Beijing) would be priced at at least $15 in US or Europe. Therefore the comparable service should have “contributed” >100RMB GDP to the Chinese economy instead of mere 10RMB.

    Now let me extrapolate, suppose that 20% of the service economy in China was priced this way (1/10 the cost of US), then this 20% is currently worth:
    $4.22(trillion)*40%*20% ~ $340(billion)
    but which would have been valued at $3.4 (trillion) by the western standard. Therefore the actual 2008 Chinese GDP would be around $7.5 trillion …

    I would like take my original assertion back. I don’t think that Chinese economy is much bigger than the statistics suggested, but the US and European economies are much smaller, much much smaller …

  27. wuming Says:

    The calculation I did above also challenges the other myths about Chinese economy.

    The first is that the Chinese economy relies its export oriented manufacturing sector, since it accounts for 50% of its GDP. The fact is that the prices of manufactured goods in China are comparable or even higher than those I see in US, while the prices of services are much lower than those of US. From this we can draw one of the two possible conclusions: either Chinese service industry should have contributed much higher portion to its GDP or US service sector should be much less than 80% of its GDP. I tend to believe that the second conclusion is closer to the truth.

    The second myth is that Chinese are not consuming as they should. The extrapolation I did above would have also suggest that the consumption is actually much higher, but it was priced too cheaply.

    The problem at the root is how the services should be valued. Since much of the service industries are bound to the geographical locations, the valuation discrepancy is inevitable. But such discrepancy has large effect when we compare economies, at least psychologically.

  28. raventhorn4000 Says:

    SKC,

    “I’ve said it before. I’m here to learn, from those capable of teaching me. Otherwise, I’m here also for amusement. You’ve proven yourself extremely adept at providing the latter; if you want to have a go at providing some fodder for the former, then by all means please do. But as I said, suit yourself. In the meantime, if you could spare us statements like “You have people who had accurate predictions, Your media blocked them!” unless you had some proof, that’d be grand.”

    I don’t think you are capable of learning, evidenced from your continual ignorance and continual assumptions. I refuse to talk about your ignorant assumptions. They are irrelevant to the issues.

    Your “fun” is still irrelevant to all topics here. Come back when you grow up.

    Obviously you have nothing to offer in this forum, You are just wasting my time, so I’m not going to bother to prove anything to you.

  29. S.K. Cheung Says:

    To Wuming #27:
    that’s interesting. When you speak of “service”, would you generalize that to labour as well? I believe there was a post on this topic a few months back. My impression (from HK) is that labour is relatively devalued there, while it is rewarded at a premium in the US and Canada.

    To R4000:
    “so I’m not going to bother to prove anything to you.”
    —fantastic. Suit yourself. On other threads, i’ve been telling you the same thing for days. It seems to take you a while for stuff to sink in.
    All work and no play makes Jack (and apparently R4000) a dull boy.

  30. wuming Says:

    SKC,

    First, you probably did not notice that I mentioned that the manufactured goods in China cost comparable to those in the west. My math is based on this premise.

    Second, you maybe right, that labor cost is much lower in absolute terms in China. While in PPP terms the picture is less clear given the stage of the development. I also mentioned the other possibility, namely the some labor is over-valued here, and often those kinds of labor can not be easily traded cross border.

    Whichever is the case, from either side you see a distorted picture on the other side. The current circumstance should put a damper on our confidence for our own systems (in my case the US system)

  31. wuming Says:

    One more thing ” .. while it (labor) is rewarded at a premium in the US and Canada.” Is it a premium which we can actually afford? To borrow money to pay your workers at a premium … great idea if it works.

  32. S.K. Cheung Says:

    To Wuming:
    “To borrow money to pay your workers at a premium … great idea if it works.”
    —I see your point. I think one issue with the automakers, as an example, is that the cost of labour for those currently working is probably not out of line with the Japanese companies; however, the “legacy” costs, mostly related to financing of pensions, makes the total labour cost per vehicle much higher. Over time, as Japanese automakers look to sustain more retirees, they may run into a similar problem. It’s also in part a social/societal value judgment, I think. The social safety net is better in US/Canada is better than in China, I think, and not just for retirees.

  33. Steve Says:

    @ wuming: You bring up a really good point. Do you know why electronic goods that are made in China cost more to purchase there than in the US? I’ve had friends in Shanghai ask me to check prices here and they ended up being more expensive there. If the goods are made there, I’d think they’d be cheaper there. It never made any sense to me.

  34. wuming Says:

    Steve,

    Here is my explanation: some manufactured goods are probably cheaper in China and some others are not. In this age of global trade, market will not tolerate the large price differential on something that can be shipped to anywhere and the shipping cost is only a small portion of the total price. Where the large differences occur usually are with products like labor and services that can’t easily be moved from one country to another.

    SKC,

    Direct comparison of the quality of lives in China and the West will give the conclusion that you drew. I am attempting to make the point that the real GDP of China is under-estimated. On per capita basis, China may never catch up with the West. Started too late and too little natural resources.

  35. Wukailong Says:

    @Wuming: Just curious, why do you think China may never catch up with the West? I’m both confident and hopeful this it will indeed catch up even before I retire… :)

  36. wuming Says:

    WKL,

    Since per capita is computed as an average, for the vast hinterland to enjoy even close to Western style living, the earth resources will be sucked dry. So it is the hard physical constrains that prevent China from catching up. On the other hand, by the time you retire, I can easily imagine 1-2 hundred million Chinese will enjoy life that are better than those of US and Western Europe.

  37. Chris Mc Says:

    Of course China does this. It’s no longer a secret. Local government leaders have spoken up and out just enough to get the word out — namely, that they are forced to report better numbers than is the reality. Secondly, China is still very, very poor. Just yesterday there was a story of a man who drove a cement truck for a company in China — they paid him no over-time and he was working 60 hours per week for just about $216.00 PER MONTH. The company then cut his wage to $119.00 per month. That’s basically $30.00 per week for 60 hours per week? Come on. Secondly, international organizations estimate that over 800 million Chinese still live on $2.00 or less per day, with most living on $1.00 per day. It’s not much better for roughly 300 million more. That means that really, only about 300 million are living just okay, with in reality, only about 25 million living well. So where is this growth? Exports? Exports are down.

    The growth, my friends, is fake and is based on government spending! I mean face it: everything in China is state controlled, no matter how much they deny it. They don’t allow outsiders to do any audits, so the government of China can say anything they want…who can verify it? The China myth is coming udone. Fact.

  38. JXie Says:

    A bubble doesn’t form below a prior peak, but rather forms at an extended period of time when new highs are continuously made. It’s probably very tough to be Albert Edwards this morning with China’s Q2 numbers. The problem with some of these permabears is that they never turn bullish, if once in a blue moon their bearish target is reached, they just lower it even further. Also you don’t know if Edwards started turning bearish on Asia in 1987 or 1993, or dot-com in 2000 or 1996. If it was 1996 or even early 1997 on Asia, he was either a genius or just pure luck, but at least he was right; but if he started much earlier, then that really means jack.

  39. jonkoot Says:

    China is relatively new to the Capitalist system of politics and government. China is the bumbag of the global economy. Barclay’s and Mumbai are two sources of old money that knows well how to pin the tail on the donkey when it comes to placing blame and smelling like a rose.
    Why will India supercede China in the race for the prize of global dominance? The answer is really quite simple. India was taught by the masters of Global Business beginning with the Dutch East INdia Company, the the British East India Company.
    Eventually these companies combined to become the Hudson’s Bay Company. The Bank of Barclay’s located in England is the prime share holder in this Corporation. Pinning the tail on the donkey is an ancient game , made popular in Mexico during hte Spanish Inquisition. What better donkey to pin the tale on than Barclay’s, one of the largest Commercial Central Banks in the World? It is highly popular to blame the rich and famous, and even more fun if you are not a member of the jet set.
    What proof do I have ? Absolutely none. Not one iota of reason or sound judgement. But that never stopped a fiction writer from writing up a good story. The problem isn’t in coming up with a story, it is in getting published.
    So here’s my story, all the conspiracy theories since the Jewish Bankers trying to run the world to date were generated from Barclay’s. They knew how to play the game, because they invented the game.
    But there is another game we play these days. It is called Fish. Basically you have a deck of cards, and two players try to find out what cards the other player has by asking them if they have a specific card. If they have the card they give it up, otherwise they have to go fish for another card, and the other guy gets to ask you for a card, the first one to empty their hand wins.
    I think God mentioned this when he was talking about teaching you how to be a fisher of men. LOL.
    Okay so it is all BS. The point is, watching Bollywood Movies is as informative as listening to the news concerning the Global Economy. No One in their right mind is going to show their cards, it would be foolish to think that being honest and having transparency and disclosure are what winning is all about in the world of Politics Money or any other affair concerning mortal human beings.
    I would hope that the Government of USA is lieing through their teeth when it comes to insinuating this is the truth the whole truth and nothing but the truth, unless they are seriously trying to make our vulnerability complete and absolute.
    You can not sit at a table and play liars poker if you are going to tell the truth, unless you love losing. So what is all this foolish revelation concerning China Lieing. How hilariously gullible do you think we are? Or like Firesign Theatre once asked, “What kind of fool do you take me for?”
    To which the dealer answered “First Class!”

    Yes, China is Lieing and so are every other word from every other mouth talking about money.That is why India will win the race in global market against China, they are better liars, hell lieing is a religion to the Indians of Mumbai.
    Cuba taught us this lesson in spades, Castro had his romanitic notion of socialism while the Mafia had their vision of Money, while the Mob ruled Havana the money was beyond measure, the minute Castro “won” his holier than thou revolution to share and share alike the spigot was turned off, and Cuba was left in utter destitution until Russia stepped in and artificially maintained Cuba until they collapsed from the weight.
    This is the Story of Global Finance and always has been, He who talks last loses, and the one to shut their mouth and hold their cards close to the chest are always the winners. In Poker they call this bluffing, in business they call it survival.
    So if China really wants the Title they had better learn to play the game quickly! Not to be disrespecful of China whom I believe is the Master of the Game, but considering the ludicrous assumptions of this post , well I rest my case.

  40. TonyP4 Says:

    Hi Jon, well said.

    * East India Co. was one arm of the evil British empire and the other arm was the warships. They exploited how to benefit and invade foreign countries. When they found they had nothing to trade for silk and china, they became the drug pushers (drugs are from India).

    No civilized country in our recent history is drug pusher with the warships to enforce the drug traffic. They also looted Chinese treasures and burned down palaces. Yes, they had stupid excuses! Hope some one will find the argument in the parliament meeting on sending warships to enforce the drug traffic and destroy the resistance.

    * In the near future, I do not think India will pass China.
    - India had the free market system far older than China. They’re a long, long way to compete. Their Tier I cities cannot even compete with the Tier 2 cities in China.
    - The infrastructure is terrible in India – not sth to fix fast.
    - The fact a lot of ‘return turtles’ to China but not much to India tells a story.
    - India’s protectionism results in poor quality – sth they learn from their old master.
    - a country too dedicated to religion is not good for the economy – see the holy cows in main street in cities.

  41. Steve Says:

    @ jonkoot #39: A Nick Danger reference on FM?? Wow, you definitely get kudos for that!! :P

  42. wuming Says:

    The problem with India is that it started to believe its own PR and the Western media’s condescention about the “world largest democracy.” The fact is that democracy != good governance, and India has not made the strides necessary in the area of good governance.

    Another thing is that Indian workers’ demand for wage increase often outstrip the increase in productivity. It is often said that demographically China will grow old before it grows rich — that may well be true. But in the case of India, it may grow expensive before it grows rich.

    As for cheating … I don’t know … how long can you cheat? If the people are not (well) fed, they will die (early).

  43. Chinawatcher Says:

    I’m somewhat puzzled by how this discussion has evolved. It started with a news report quoting economists from established financial institutions (all of whom are either Western expatriates or ethnic Chinese) to say that China’s GDP statistics was suspect. The fact that it appeared in an Indian newspaper is, to my mind, purely incidental (and quite beside the point). Yet, the discussion has turned around to criticism of India (Comments 1, 39, 42 above) – and of the original poster here (Comment 7 )! Is that a Sun Tzu strategy to go on the offensive when your defences are crumbling? :-)

    Well, here comes confirmation from Wang Yang, Guangdong party secretary, that some provinces do fake GDP. I found this on the World Socialist Website http://bit.ly/aY6tA and this article by the same author who was cited in the original post – that pesky little brown Indian! http://bit.ly/NvibT

    Now, let the savage attacks – on socialists and Indians – begin anew… :-)

  44. Wukailong Says:

    @wuming: “The fact is that democracy != good governance, and India has not made the strides necessary in the area of good governance.”

    So for the statement X == good governance to become true, what do you need to substitute?

  45. wuming Says:

    @Wukailong
    I can only think of the tautology good governance == good governance, there is no substitute.

    @Chinawatcher
    I wish India will do very well economically and otherwise, just offering some “constructive” criticism. As for how the discussion has meandered. Isn’t that what a months old discussion suppose to do?

  46. TonyP4 Says:

    Go back to the original topic.

    Do we trust China’s official figures esp. on GNP? I do not.

    However, there are two statistics to support the economic is improving.
    1. The stock market usually recovers 6 months before the economy unless the herb is wrong (blinded by the government figures). It is about 70% up.

    2. The housing recovers and in some Tier I cities, it seems there is a bubble forming.

    China is stockpiling oil and minerals and driving the global commodity prices. It is in some way leading the globe to recover.

  47. Steve Says:

    @ TonyP4: The two things you mentioned might be driving up for another reason. I’m no economist but I have read about this in several articles recently. Others can judge the truth better than I can.

    Because the Chinese government has given the banks so much liquidity and encouraged lending to spend their way out of the economic doldrums and keep the economy growing at the goal of 8% per year, some economists have looked at the investment and spending numbers and say that a huge chunk of this new money has been put into the stock market and real estate, thereby creating bubbles in both markets. So if these two markets eventually crumble, then the government will have to add liquidity to bail out the banks, similar to what the USA has gone through over the past year.

    This may or may not be true but since it’s been reported as such, I thought I’d bring it to everyone’s attention and have better minds comment on it.

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