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12 Aug 2013
Suspicions turn to claims in Chinese data manipulation
FXstreet.com (Barcelona) - After years of suspicion, one person has gone the next step to show the world just how the Chinese powers-that-be are likely massaging their internal numbers to produce artificially-high economic growth data.
Manipulating housing inflation data produces goosed-up GDP
Christopher Balding of the HSBC Business School at Peking University noted in a new study that China has been overstating their economic growth indirectly by understating their inflation rate by manipulating the Chinese housing data in various ways.
Balding points to fairly obvious methodologies being used by the numbers-producing statisticians to generate the GDP growth data their government officials – and many global investors have been addicted to over the years. Some of those techniques apparently included using erroneous housing inflation assumptions and underweighting the already-erroneous data in the country’s overall inflation index. All of those efforts have consistently overstated China’s GDP numbers by an estimated 10% annually according to Balding.
Suspicions confirmed
Balding’s new study comes as no surprise to many economists and analysts who have been screaming from the mountain tops for years that the numbers emanating from China on a month-to-month / quarter-to-quarter basis are not to be trusted.
Bert Dohmen, author of The Wellington Letter (subscription) and The Coming China Crisis (e-book), says that China faces a very real economic slowdown and / or additional problems resulting from potential investor outflows if China moves to stimulate via currency devaluation. If the 34-year veteran of the global markets is accurate in his calls, China will need to ramp-up its smoke-screening even further.
It makes traders’ and analysts’ brows sweat when contemplating having to consistently deal with unreliable data – but that appears to be the world in which we live.
Manipulating housing inflation data produces goosed-up GDP
Christopher Balding of the HSBC Business School at Peking University noted in a new study that China has been overstating their economic growth indirectly by understating their inflation rate by manipulating the Chinese housing data in various ways.
Balding points to fairly obvious methodologies being used by the numbers-producing statisticians to generate the GDP growth data their government officials – and many global investors have been addicted to over the years. Some of those techniques apparently included using erroneous housing inflation assumptions and underweighting the already-erroneous data in the country’s overall inflation index. All of those efforts have consistently overstated China’s GDP numbers by an estimated 10% annually according to Balding.
Suspicions confirmed
Balding’s new study comes as no surprise to many economists and analysts who have been screaming from the mountain tops for years that the numbers emanating from China on a month-to-month / quarter-to-quarter basis are not to be trusted.
Bert Dohmen, author of The Wellington Letter (subscription) and The Coming China Crisis (e-book), says that China faces a very real economic slowdown and / or additional problems resulting from potential investor outflows if China moves to stimulate via currency devaluation. If the 34-year veteran of the global markets is accurate in his calls, China will need to ramp-up its smoke-screening even further.
It makes traders’ and analysts’ brows sweat when contemplating having to consistently deal with unreliable data – but that appears to be the world in which we live.