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Lies, Damn Lies -- and Chinese Statistics
China's GDP grew by 10.9 percent in the first half of this year and by 11.3
percent in the second quarter. These figures stunned analysts.
A catch phrase in China says that "numbers make cadres and cadres make up
Even more frightening is fixed asset investment. Generally speaking, 25 percent growth in fixed asset investment is adequate to sustain normal economic development. However, China's grew by 31.3 percent in the first half of this year, pointing to an overheated economy.
Yi Xianrong, a Beijing-based economist, quoted statistics released by
Back when the government was trying to push economic growth to 7-8 percent per annum, officials at every level exaggerated figures to ensure promotion Once the economy took off, local government officials worried that the central government's macroeconomic controls would hurt their economic interests and so reduced the figures they reported.
The regular approach to managing an overheated economy is to rely on monetary policy and raise interest rates. However, China is facing a unique situation.
Over the past two years, officials have warned that the economy is overheated.
In April, China's central bank raised its one-year lending rate by 0.27
Why have the authorities kept their foot on the gas? First, many state-run
Second, only rapid economic development and massive investment enables corrupt officials to ply their trade, particularly those officials who approve loans.
In the end, the government can do nothing about its overheated economy but let it continue until the bubble bursts. Chinese Premier Wen Jiabao's (Ua_) lament that "government decrees don't spread beyond Zhongnanhai" captures Beijing's predicament.
For the first half of this year, investment in real estate development
Repeated adjusting of macroeconomic policies means less profit, and therefore foreign investors are made to suffer instead -- as demonstrated by Beijing's
If China continues to refrain from political reform and is unable to solve
Paul Lin is a political commentator. Translated by Daniel Cheng
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