Have We Been LIED TO?! China’s FAKE GDP Numbers!! 🇨🇳

Apparently china’s gdp will overtake the Us’s in 2030 at least according to the Growth statistics that china is Publishing However can we really trust those Numbers and is this growth vastly over Inflated thanks to unnecessary economic Production Well that’s exactly what i’m going to Explore in this video i’m going to Dissect those chinese gdp numbers and Analyze whether there could be Over-reporting there or worse fraud This is a video you can’t afford to miss [Music] Before we dissect china’s gdp i have a Little confession for thee Financial advice is not something you’ll Get from me so if it’s what you’re after Look elsewhere please What you’ll see here is just to Entertain and educate so hit up a Financial advisor if your portfolio is a Disgrace If you haven’t stopped by this place Before my name is guy and i have just What you’ve been looking for Here at coin bureau we cover everything Crypto and so much more so if the Thought of that fills you with awe tap The subscribe button and the bell icon To get your foot in the door Okay that’s quite enough of that let’s Hear the truth about china’s gdp stats

Before we dive into the data it’s Important to quickly jog our memory About what gross domestic product is and How it’s calculated So Quite simply gdp is the sum of all the Goods and services that are produced in A country within a particular time Period It is perhaps the best measure of a Country’s total economic output So for example the u.s gdp for the whole Of 2021 was 23 trillion dollars whereas China’s was about 17 trillion dollars 73 Percent of the us’s Now in order to get the best measure of The productiveness of all the citizens In the country these gdp numbers are Sometimes looked at on a per capita Basis Now given that china has about four Times the population of the us its gdp Per capita is actually ten thousand Dollars compared with about sixty three Thousand dollars in the us so bear that In mind However what’s more important from an Economic planning perspective is how the Real gdp numbers evolve i.e the growth Of the gdp numbers adjusted for Inflation this allows policymakers to Determine how well the economy is doing And these are the numbers that Economists and market participants tend

To talk about In the first quarter of this year u.s Real gdp decreased at an annual rate of 1.5 percent whereas china’s increased at A rate of 4.8 percent Now while the u.s number can be Explained by a few factors see my video In the description those chinese numbers Appear as a bit of an anomaly This was because q1 included a number of Weeks when china was going through mass Coveted waves And not only that but china deals with Kovid in a completely different way to Most of the rest of the world China takes a zero tolerance approach Which sees people locked in their Buildings factories shuttered ports Closed and roads controlled Quite simply this is not conducive to Economic activity So this is why many people were quite Surprised at these growth numbers but Then again accusations of dubious gdp Numbers are nothing new when it comes to China Over the past 15 years there have been Numerous accusations of inaccurate data These have even come from some of the Highest ranking officials in the chinese Communist party Back in 2007 wikileaks released a u.s Diplomatic cable that quoted lee kashang The head of the communist party in

Northeastern liaoning province In that cable keshang said that gdp is Quote man-made and Unreliable now he’s not talked about This since and that’s perhaps because He’s moved up the ranks and is currently The premiere of the state council Essentially number two to comrade g Be that as it may in order to best Understand chinese gdp numbers however You have to know how the data is Collected Now when it comes to gdp data in the West it’s pulled from a number of Different sources In the u.s the bureau of economic Analysis bea is charged with calculating The country’s gdp It is a fully independent body made up Of civil servants and tasked with Providing the most accurate estimate it Can And the bea gets this data from outside Sources most of it comes from federal Agencies such as the census bureau the Bureau of labor statistics and the Treasury Again all of these agencies are Non-partisan and are tasked only with Providing the correct data Over in china it’s a little bit Different The economic numbers there are published By the national bureau of statistics now

This gets a great deal of its gdp data From those recorded by various local Governments in the provinces and Prefectures The agency as well as government Officials are independent in so much as They all have allegiance to the ccp When it comes to the local officials in The provinces it’s not the market nor The voters who determine their fate but The central government as such they have To be benchmarked according to some Criteria Most often these criteria relate to Economic performance in the province or Locality Yes china may still be communist but They do love that mullah Anywho what this means is that these Local officials are incentivized to Produce good economic numbers This determines how far they get up the Political ladder and creates a perverse Incentive Moreover you don’t want to be the leader Of a province or city that is Underperforming especially in a country Like china So does this create an incentive to Cheat or fudge those numbers Well it has actually happened In the past officials have been caught Submitting fake data Back in 2017 the industrial city of

Baotou in china’s inner mongolia revised Its estimated fiscal revenue down by 50 Yep it was double the number expected How crazy is that They said in their report that this was Down to factors including quote fake Additions It wasn’t the only region though Days earlier the governments of inner Mongolia and tanjin said their fiscal And economic numbers for 2016 had been Overstated Now to be fair it’s not as if the Chinese central government actually Wants local governments to falsify their Data they need data that’s correct in Order to better allocate state budgets Moreover they want to make sure that They are adequately rewarding those who Really do bring in legitimate economic Growth That’s why they still do run Anti-corruption probes and the most Recent of these took place last year In that probe they found that quote in Some cases local party committees and Governments forced subordinates and Enterprises to fabricate figures at each Level to complete their target Achievement mission So brazen was the fraud that these Government officials left messages in Chat apps asking business leaders to Make sure that they reported more than

20 million yuan about 3 million us Failure to comply would mean that the Company in question would be removed From the statistics database and no Longer enjoy preferential policies Pretty damning if you ask me In communist china economic growth comes At the cost of economic freedom Now how widespread this could really be Is hard to tell But there are studies that have been Done to determine whether there is any Bias in the data i.e have they slanted One particular way over the other One of these was a yale study where the Researchers looked into over-inflated Local gdp numbers i’ll leave a link to It in the description for you They basically studied the reported gdp Numbers of 431 provinces and 3418 local prefectures from 2002 to 2015. in each case they compared the Reported gdp to the target set by Government officials What they found is that provinces and Prefectures were four and five times More likely to meet or beat their Targets Now this is strange because you would on Average expect the chances of reporting A gdp number just below the target Should be about equal to the chances of Reporting one just above target They also tried to delve into the causes

Of these discrepancies and what they Found was pretty obvious Those regions more likely to show signs Of manipulation were those in which Promotional opportunities were tied to Economic performance Beyond these local anomalies though There are broader questions about the Country’s top-line gdp numbers over the Years so Let’s look into them now one of the most Suspicious things about the chinese gdp Growth over the years is just how smooth It’s been The reason why this is weird is because Gdp growth numbers are actually quite Volatile look at the past two years for Example There are so many factors that go into The gdp numbers beyond just industrial Production This is perhaps best illustrated by this Graph over here which shows the Volatility of the gdp in a paper from The new york fed It’s a rolling five-year coefficient of Variation between china and its top Trading partners As you can see it’s pretty stable Compared to the rest and appears to be Becoming more stable in recent years The authors of this fed paper actually Take a much deeper dive into the Question of sparse chinese data and i’ve

Linked to it below The main point they make in the paper is That this data does indeed look Impossibly smoothed Quote the steadiness calls into question The usefulness of china’s official Growth data in forecasting and in making Policy and business decisions at least In recent years Now it’s not to say that smoothed data Is in and of itself a sign that the data Is false a large part of it could also Be because of the fact that china is not Able to collect growth statistics as Frequently as other countries Given this relative lack of data and the Skepticism with which they’re viewed People have resorted to coming up with Their own measures of chinese growth and This has been through data sets that are A lot harder to smooth Some of the data that’s been used has Focused on factors such as Tax receipts no one is likely to claim To owe the government more Night time light intensity observed from Satellites we all need lights Electricity generation we all need power Railway cargo and imports you can gather Data from more reliable trade partners Funnily enough these methods of looking Into the economic growth are not Necessarily a western idea They were actually even suggested by the

Likes of lee kashang she’s number two Who i mentioned earlier After he made claims about the man-made Nature of gdp numbers he also said that He prefers to look at some of these Harder-to-fake numbers In fact this event led to the economist Magazine naming this growth index the Quote li kashang index This analyzed factors such as Electricity consumption railway cargo And loans that were dispersed by banks Since that time though there have been a Number of other researchers who have Tried to come up with their own Benchmarks of chinese growth Another branch of the fed this time out In san francisco had also come up with a Proxy for chinese growth This took a look at indicators such as Consumer expectations and fixed asset Investment they too conclude that Official growth has been implausibly Smooth since 2013. In this chart here you can see their Proxy measure as well as that of capital Economics compared with the official Numbers but perhaps one of the most Damning studies was conducted by a group Of four economists one from the University of chicago and three from the Chinese university of hong kong They did a quote forensic examination of China’s accounts and published their

Analysis in a series of working papers These use some of the same data sets That i mentioned a few moments ago and What they concluded was quite startling According to their benchmark of chinese Growth the official gdp statistics have Been overstating it by an average of 1.7 Percent since 2008. Now while that may not sound like a lot Off the bat you have to consider the Impact of compounding Over the period from 2008 to 2020 the Length of the study that would imply That chinese gdp is a full 20 percent Lower than is being reported right now Just think about that Okay so that’s pretty startling but Let’s assume for the benefit of the Doubt that those chinese gdp numbers are In fact accurate Can we confidently say that the type of Economic growth that china has been Experiencing is high quality growth Allow me to explain I’m sure that you’ve heard of the Phenomenon of china’s ghost cities Essentially entire urban developments That have been built but lack a key Ingredient people to live in them Thanks to one of the most crazy and Unsustainable property booms of all time These ghost cities have proliferated all Across the country Did you know that there are actually

Mini paris’s and mini london’s in china I didn’t Cities built to replicate other more Famous ones only to sit empty as people Didn’t really want to live in them In total a full 20 of all the urban Housing in china stands vacant it’s Pretty wild right These are not only the result of Overzealous central planners and Government officials they’re also the Products of crazy property development Companies that have built millions of Residential units on unsustainable debt Now perhaps one of the most well-known Of these is of course evergrand and i Did a video on that company last year in The description for your viewing Pleasure It’s not just housing though there have Been roads built to nowhere bridges that Are never driven on and tunnels that Nothing travels through Ambitious projects that were developed To link what turned out to be ghost Cities The point is i’m sure you can agree that These cities roads and bridges did not Add much quality growth to china they’re Not being used in any way and in some Cases are just degrading However you can bet your bottom yuan That they’ve been included in local Level gdp stats

And according to those stats Construction makes up just over 25 Percent of the entire chinese gdp That’s perhaps the highest proportion of Any country in the world To give you a bit of context in the us The share of gdp that’s made up of Construction Is around 4.2 percent And the last time i checked there were No ghost cities in the states While a local government leader may Avoid brazen fraud in presenting their Economic numbers there’s way less Scrutiny if they approve unnecessary Projects They can always tell the central Government that they’re building to make China great and that these cities will Eventually be filled The broader question then comes down to Whether this is indeed sustainable will China continue to build despite lack of Demand and what about those developers Is it good business sense to have 20 Percent of your country’s housing stock Unoccupied Moreover if some of those property Developers do indeed go bankrupt what Impact could this have on the broader Economy Given that construction makes up such a Large percentage of the gdp numbers one Would have to expect a retracement of

Some sort But then again given recent experience With china’s miraculous growth even During the lockdowns one has to ask Whether it will find a way to keep Growing Now that’s it for most of my video today Save for a few closing thoughts from Yours truly I will admit that for the longest time Ever i always thought that gdp numbers Could be trusted however it wasn’t until These past two crazy years that i Started to question that long-held Belief Now there’s no doubt that china has been Growing at a rapid clip the last 30 Years have radically transformed the Country from a sleeping giant into the Economic powerhouse that it is today However it would be foolhardy to assume That transparency has appeared in the Wake of economic transformation China still ranks pretty low when it Comes to economic freedom indexes and This shows that much of its growth comes Through the machinations of the ccp The same can be said about the data Being collected and presented by the Internal agencies they have an Allegiance to the state and will thus be A lot less inclined to publish data that Looks bad Now it’s not as if the central

Government actually wants false data it Needs to get an accurate read of the Situation and has even begun cracking Down on graft and corruption at local Government level However the rigid incentive mechanisms In place create this perverse incentive Where local government officials are More inclined to round those numbers up Than down and even if they report the Most accurate stats that they can They’re still incentivized to approve The most ambitious building projects Roads bridges tunnels railways housing Projects These all add to the bottom line of not Only the region but the local official Themself That’s why it’s important to also Appreciate the importance of high Quality gdp growth These numbers mean very little if They’re going towards infrastructure and Housing that no one uses And it’s not like this is something That’s lost on the ccp there have Recently been efforts to emphasize Quality over quantity They are equally concerned about the Property bubble that companies like Evergrand have spawned and they have More recently been trying to slowly Deflate it However if the chinese government are

Themselves concerned not only with the Veracity of the economic numbers but Also the quality of economic growth then It means we should be too So when they report their q2 economic Numbers in the next month or so be sure To have some salt handy And that’s it for my video today folks But i’m really keen to get your feedback So what did you think of it do you also Have suspicions about china’s economic Growth and are there any chinese Citizens out there who’d like to opine Please fire your comments into the box Below oh and while you’re down there you May want to check out my socials page It’s over here where i have links to all The other places that you can follow me Off the tube these include My telegram insider channel for daily Market updates My tick tock and instagram for behind The scenes views My twitter for announcements and other News And my weekly email newsletter it’s here Where i share my once weekly take on the Markets as well as give you the Breakdown of my personal portfolio It comes with a complete 100 Spam free guarantee Oh and if you’re looking for some of the Best promos and discounts in the land Then my deals page is what you need so

All of that which you seek is below Finally if you think this crypto guy did A fine job smash up that like button and Don’t forget to hit that subscribe Button as well oh and don’t forget the Bell too so youtube can give you a bell As well I’m off to work on my next video which Will be equally as juicy as this one so Till next time folks stay safe stay well And stay crypto [Music]

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