Monday, April 27, 2015

China Exaggerates Growth Statistics

According to Mark Magnier’s article (Link Here), China has most likely overstated their growth rates to be a politically desirable value of 7%, which is the lowest rate in several years. However, many are doubtful of the China’s statistics and assume that that the growth rate is much lower. The first hint that makes the growth rate seem unreasonably high is the statistics that China provides do not fluctuate like in other economies, such as the United States. The second hint is that the exact methods to incorporate inflation into China’s GDP are unknown. The third hint is that the industrial production, a surrogate for growth rates, was unusually low compared to the GDP growth statistic provided. The fourth hint is that consumption, investments, and manufacturing outputs have been very weak lately. Finally, in 2007, Premier Li Keqiang – one of the Communist Party chiefs – said China’s GDP values were “man-made and therefore unreliable.”

Even though some may say that China’s National Bureau of Statistics is more professional than in the past, it seems as though they fail to provide accurate statistics. One possible factor leading to the discrepancy in statistics that is stated in the article is the exaggeration of data from local officials. Overall, the fact that China’s statistics are false is concerning. What are your thoughts on China’s faults stats? Besides China gaining too much power, I think that China's faulty stats may be another reason why China may not be included in the TPP.

10 comments:

  1. I'm not really surprised by the article and beliefs, backed strongly by hints that indicate false stat reports. It's interesting how they can lack so much transparency, and top economists can't figure out how they account for inflation when tabulating GDP. It's also skeptical how China's figures are "suspiciously smooth", showing a history of some fabrication. What I'm most intrigued by is if leaders do in fact have a second book to know what's really going on (like the article mentions). If I lived in China, I would feel lied to! I'm also curious as to why they do this, which the article doesn't really go deep into. Is it preventing social instability like the article mentions?

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  2. I also think it is interesting that China can lack so much transparency but not entirely surprising when you consider China's political history. I think that false growth rates may help prevent social instability as well as potentially help growth in China. We have read other articles discussing the fact that consumers invest and consume more when they are optimistic. I would be interested to know if China's economy could be doing better than it otherwise would due to the false statistics.

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  3. I also think it is interesting that China can lack so much transparency but not entirely surprising when you consider China's political history. I think that false growth rates may help prevent social instability as well as potentially help growth in China. We have read other articles discussing the fact that consumers invest and consume more when they are optimistic. I would be interested to know if China's economy could be doing better than it otherwise would due to the false statistics.

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  4. As Cam said, I'm not all that surprised that China exaggerates their growth statistics. It's disappointing that politics would get in the way of a government being honest with its people. This lack of transparency takes away peoples ability to react to fluctuations of the economy. Maybe fabricating growth statistics can boost optimism in the short run, but in the long run, it's bound to have negative consequences.

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  5. I guess I'm not that surprised to hear this, considering how much it seems China wants to be at the forefront of the world's economies. We also talked about the psychology of economies, and how they're almost self-prophesizing (i.e. if the general population believes that all is well, then chances are that everything will continue that way. The second the public think something bad is going to happen, even if it isn't, their actions and unfounded beliefs can cause an economy to tank).

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  6. This is interesting, and I am not surprised of the Chinese lack of transparent economic data. China's growth model has almost always relied on cheating with the numbers. It would be interesting to know the outcome of the Chinese false data on its economy.

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  7. As everyone as stated before I am also not surprised by this that China's economic data are false reports. It's interesting to me that China would feel that they have to make these reports false in order to show that they are not slowing as economy. It will be interesting to see if these false reports will have a negative effect on the economy or if Alex's idea that if the population feels that the economy is well that it will continue to be fine.

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  8. This is an interesting article, but I'm also not surprised that China may falsify its growth rate due to China' political history, like Bronte mentioned earlier. I think the false growth rate numbers that China has put out there have probably impacted its economy in a positive way, when it really shouldn't have. Consumers buy based on how optimistic they are about a certain market or economy, and exaggerated numbers probably produce a lot of optimism. Also, if the idea gets put in the China economy that these numbers are false, then I think it could hurt the economy more than falsifying the numbers has helped.

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  9. I agree with Aleks. This is not at all a surprise to me either, given China's political history. It might be the self-prophesizing purpose. It also seems that China exaggerated its statistics to claim more power (?) in its competition with the U.S.

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  10. I agree with Aleks. This is not at all a surprise to me either, given China's political history. It might be the self-prophesizing purpose. It also seems that China exaggerated its statistics to claim more power (?) in its competition with the U.S.

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