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It’s long been believed that China’s economic data is untrustworthy, but now that the Chinese economy is clearly cooling down, that theory is being put to the test, and it seems to be confirmed that the government isn’t always forthright about the numbers.Keith Bradsher at the New York Times has a good overview of the situation.
He notes that in addition to there being an economic slowdown, this is a year of political transition, which further creates pressure on folks at all levels of government and in state-owned-enterprises to juice up the data.
“The government officials don’t want to see the negative,” so they tell power managers to report usage declines as zero change, said a chief executive in the power sector.
Another top corporate executive in China with access to electricity grid data from two provinces in east-central China that are centres of heavy industry, Shandong and Jiangsu, said that electricity consumption in both provinces had dropped more than 10 per cent in May from a year earlier. Electricity consumption has also fallen in parts of western China. Yet, the economist with ties to the statistical agency said that cities and provinces across the country had reported flat or only slightly rising electricity consumption.
Meanwhile, for some ugly numbers that are coming from official sources, check out these reports from Xinhua.
- Chinese cement output is up just 5% this year compared to growth of 14.3% for the same period last year.
- In May, flat glass output fell 10.2% (!) vs. growth over over 20% in the same period last year.
- The building material sector has seen a 7% profit drop.
Combine the weak China news with the cracking of the German economic miracle, and it’s clear that the big export-dependent economies are in a world of pain.
The US continues to look good by comparison.