China’s Economy Expanded at X%

If you think I am skeptical about the BLS data, imagine how I feel about this nonsense from the Red Communists of China’s Central Economic Planning Bureau.  (Those guys make the BLS look like Capitalists).

I have no idea what the actual number is; I’d like to have a reliable source as to the actual growth rate of China.  I simply don’t trust the commies to release the real data.

If anything, I suspect that they may be understating growth so as to appease their trading partners (like the U.S.). Consider that investments in fixed-assets
surged 26.1% — More than $700 billion in the 1st 3 quarters. At the same time, Exports jumped 31.3% to $546.4 billion.

Here’s a quick Ubiq-cerpt:™

BEIJING – China’s economy grew at a blistering 9.4% rate in the first three quarters of 2005 as investment surged and the country’s politically volatile trade surplus more than doubled, the government said Thursday.

But the government report expressed concern about "oversized and irrational" investment in fixed assets, the relatively low level of farmers’ incomes and the nation’s bulging trade gap.

In an attempt to slow growth, Beijing wants to do more to curb investment in unneeded factories and shopping malls, said Zheng Jingping, spokesman for the National Bureau of Statistics.  The government also has no plans to let China’s currency, the yuan, rise sharply in the near future, he said.

China’s gross domestic product expanded 9.4% in the third quarter from a year earlier, slightly higher than market expectations, which had centered on growth of 9.3%. The growth rate was little changed from previous quarters and suggests the economy will maintain a growth rate of between 9% and 10% in 2005 after growing 9.5% in 2004.

GDP grew 9.5% in the second quarter and 9.4% in the first quarter. "The economy should grow by about 9% or more, giving next year a good start," said Zheng Jingping, a spokesman for the National Bureau of Statistics.

China’s Economy Expanded By 9.4% in First Nine Months

Trade Surplus More Than Doubles

October 20, 2005 4:56 a.m.

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  1. curious commented on Oct 20

    What is a “Ubiq-cerpt ” ??

  2. day4night commented on Oct 20

    Lester Thurow claims that Chinese energy use is measurable and provides insight on their actual growth figures. If you assume a certain energy use per unit of GDP, you can ballpark the actual number, which he claims has been around (a still strong) 5 point something percent or so. If they were growing at 9%, sayeth Thurow, they must have found some new source of energy, because the numbers just don’t add up.

    You can use your new video iPod to see the Thurow’s lecture on this at

    But you seem a little over the top with the “commies” thing. If you think about it, China has been a very good neighbor to all (perhaps minus Japan) since Deng. They’ve taken care of their people, even if info is still not free. I’ll remind you that in South Korea info (and speech) wasn’t free until the nineties, and they ain’t commies. They’s Confucians. When China reaches $7000 per capita GDP, some day a long time from now, freedom will arrive. Thus spake day4night.

    Meanwhile, Thurow says the source of bad numbers in China is local officials trying to please their bosses. He notes that China is so damn huge that party officials in Beijing didn’t even know about a new international airport until the military informed them about the new planes on their radar screens.

    Also, if China didn’t grow at 9% a year, then neither did anyone else, probably ever. So then what DID the Asian Tigers grow at in the late 80’s early 90’s?

    Thanks, Barry, for raising your voice in pursuit of accurate numbers.

  3. Barry Ritholtz commented on Oct 20

    I call them commies, because, well, they are a buncha communists. (Was it politically incorrect to call the Soviets commies also?)

    I take issue with the “good neighbor/ takes care of their people” stuff because:

    1) An enormous swath of their economy is illegal black market goods;

    2) Software, Music, and Movies sold there are pirated with no cash going to the rightful owners of these copyrighted products;

    3) Forced labor is not unheard of; dirt cheap wages make up their edge in competing with the west.

    4) Top government officials have too much undue influence and ownership of companies (sweetheart deals are everywhere) with little accountabilty.

    5) Corruption and Bribery is rampant;

    6) No accounting tranparency — the Books are closed and opaque; The 4 largest banks in China are technically bankrupt.

    7) Foreigners cannot own A shares, and are treated as second class shareholders.

    I’ll stop there — but you get the idea . . .

  4. royce commented on Oct 20

    Those don’t sound like problems that are limited to communist countries. Most of them them sound like business conditions that our own CEOs dream of. Sweetheart deals between government leaders and businessmen? Low-wage labor? Black market (i.e., untaxed) sales? Corruption and bribery? No accounting transparency?

    Man, these are things that capitalists dream about.

  5. camille roy commented on Oct 20

    “Man, these are things that capitalists dream about. ”

    Righto! Now we see that the only beef we ever had with the commies is that our corporatocracy thought their labor force wasn’t exploitable by red blooded American business. Now we know better.

    “Thanks for the chinese wage slaves, you CP party bosses! With the labor standards you commie’s have pioneered, we red blooded American bosses ought to be able to whip our employees into line.”

    Playbook taken from Delphi, of course.
    Way to go Delphi- cut those wages and benefits by 75%! Whatta a future this country has, it’s positively inspiring.

  6. day4night commented on Oct 20

    Thanks for the response, Barry. Many of your points taken, but I wish someone had warned you about drinking the water over there at Fox News before you did the interview….

    We’re talking about China at all because they are writing the chapter of their history called Transition from a Planned (Commie) Economy to a Market System. 1.3B new capitalists served….

    Their low-wage edge is because China is still so damned poor. And yet so educated. Remember that China is the 3rd world.

    The transition is messy, but knowing what you apparently do about human nature, could you picture a much better scenario? They’ve grown enormously, have lifted millions upon millions out of poverty without unleashing chaos or (more) revolution which could split the country. Remember we’re not talking about the transition of Poland here… Their financial sector blows, yes, but compare it to that of twenty years ago, 1985… About limiting foreign ownership, I imagine this too will change, as it did in, again, South Korea.

    Certainly, the corruption is vast. I’d even argue that cheating is built into the culture. Even in American classrooms my experience tells me that Chinese have few qualms about cheating and are good at it (does this comment give me non-PC cred?). Further trade and growth will help change things, right? And Chinese corruption is surely lower than that in, say India, a nominal democracy.

    IP is a real issue. Hopefully a silver lining will be a kind of Napster or Grateful Dead (they did so well by encouraging bootlegs) effect meaning that poor Chinese will develop a thirst for US Intellectual Property goods that will later be slaked by purchases. But still it’s a big problem I agree and point taken. Even once Beijing agrees to stricter IP laws, how will they stop local piracy? The exciting growth of Chinese cinema should prompt them to respect IP laws. That’s to say, as China develops, protecting IP will protect Chinese as well. But now the domestic interests are minor.

    The biggest problem with China, though, seems to be the willingness to foster nationalism. In fact when you go to NE Asia people are incredibly nationalistic in general, and that scares the hell out of me. That’s why I react to commie baiting.

    A question closer to the original response: What makes you think Chinese GDP is *higher* than 9.5%?

  7. bill commented on Oct 21


    Please remember that items 2,3 and 4 (at minimum) would apply to C19th USA. Emerging economies are like that.

    great blog

  8. Barry Ritholtz commented on Oct 21

    Amazingly, China has reported 9.4% GDP for every quarter over the past 3 years (Gee, what are the odds of that happening?).

    Other people have pointed out the incredible speed in which the regional reports are assmilated into one national report — 2 days. The only that can happen is if the Central Planning Bureau TELLS the regional offices what they expect them to report.

    I cannot say this is a transition from Communist to Capitalist, or merely a recognition that they must find a way to obtain resources to feed and house 1.3 billion people.

    I am far less sanguine about their motivations than you . . .

  9. Danielle commented on Oct 21

    The amazing thing is that US banks, not knowing what to do with the excess capital, are buying up shares of these near bankrupt Chinese banks.

    It’s a tug of war between the US and China right now. Either I’m missing something or the Chinese are doing whatever it can to protect itself from the US. What better way than to have the US own some of their badly run banks?

  10. jaimito commented on Oct 22

    China is not governed like a democracy and growth rates are not real statistics. Each cycle the Emperor ritually announces that the key index (rice crop) is excellent and that his relation with Heavens is harmonious. Current regime’s key index is growth of the product and each cycle (3 months, year) it is ritually announced that things are well and God is with the commies. Under Mao, it was steel production, if my memory serves me well. Steel producion was always growing fantastically.

    Apart from the ritualistic aspect, Chinese are hardworking fellows and if only left alone, they grow rich in no time. That is the social contract that the Communist Party of China has signed with its people: The Party will keep stability and make no cultural or other revolutions, you small people stay away from politics and make money. The government is not corrupt in the Western sense and keeps its side of the contract.

    As for the X rate of growth, you forget the SARS case. The whole chain of information generation and transmission was proved to be unreliable, and the Minister in charge was ritually beheaded (sorry, sacked) to show China’s sincerity in disease reporting. I do not remember that the people in charge of economic statistics were ever critisized so we can safely presume that NO ONE, not even the government, has any idea what is going on, except in a very broad manner. Probably they are reading foreign reports to understand better what really is going on Inside China.

  11. DOR commented on Oct 24

    Did I read that those nasty, no-good commies won’t let foreigners play in their stock market on an even footing?

    Communist and stock market don’t belong in the same conceptual framework. Hence, either there is no stock market, or there are no commies.

  12. Simon World commented on Oct 24

    Making China’s numbers add up

    Last week China reported another stunning GDP growth number of 9.4%. But as we’ve found numerous times before, the numbers underlying the GDP calculation don’t add up. Either China’s consumers went on strike or fixed asset investment has been over-esti…

  13. A Stitch in Haste commented on Oct 25

    Is China’s “Economic Miracle” a Lie?

    A growing number of macroeconomists seem to think so:But when you subtract investment, net exports, and government spending from GDP, you arrive at what should b…

  14. A Stitch in Haste commented on Oct 25

    Is China’s “Economic Miracle” a Lie?

    A growing number of macroeconomists seem to think so:But when you subtract investment, net exports, and government spending from GDP, you arrive at what should b…

  15. Quan Song commented on Oct 26

    It is very surprising to me that none have carefully checked the data. The data of the fixed investment used includes private and government investment, and the amount of the government consumption is the government spending, which also includes government investment. The fact is that the government investment has been subtracted twice. How can the remainder be equal to the private consumption, when you subtract government investment twice?!

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