The Perils of Trusting Chinese Growth Figures

With the dismal 2009 economic performance of the US and Europe thus far, everyone seems to be looking at China for a global economic boost. How far can you trust China's claims for 6.1% first quarter growth? No further than you can throw them, like all Chinese government claims. But where can you look for a deeper understanding of what may be going on behind the bamboo curtain? Here is one possible answer:

Welcome to China's growth puzzle. China's claim of 6.1 percent annualized gross domestic product growth in the first quarter is very difficult to reconcile with the electricity output figures from the China Electricity Council, the Southern Power Grid Co. and the Coal Council, each of which gives slightly different figures, though the overall trends are very similar.

The China Coal Council breaks down industrial and domestic consumption and suggests that domestic electricity consumption fell by 5.2 percent in the first quarter but that industrial consumption fell by 8.38 percent. These are striking falls, particularly when compared with national electricity-consumption growth rates of 14.8 percent in 2007 and 5.2 percent for the whole of 2008.

The issue of China's energy use is important because China's recovery is the first hopeful sign that the world is starting to haul itself out of the Great Recession, the most promising of the "green shoots" detected by U.S. President Barack Obama and other optimistic assessments. _Walker

China's official state pronouncements have never been trustworthy. To understand the true picture of China's economy requires a great deal of sleuthing for information. Government spending does not necessarily go toward meaningful or sustainable growth, as Americans are learning from the corrupt Obama / Pelosi reich. China is no less corrupt than the current US kleptocracy, and even more secretive and dishonest (if you can believe it).

With much of the world sinking into the destructive quagmire of "cap and trade", "carbon taxes", and hyper-regulatory energy starvation, it seems to be up to China and India to provide much of the world's energy-intensive dirty work. But if there is no global demand for China's production, all the government spending on Potemkin production will not mean a thing in terms of global recovery.

China's prosperity reflects a global prosperity -- at least it has up until now. The relationship has never worked in the reverse direction. Before we can believe that China has its act together well enough to perform as the world's economic spark plug, we will need more than government pronouncements.

Update 6May2009: More on industrial and energy reductions in China