Chinese Cheating on Their Statistics?

Q: I am curious on how reliable the statistical sources provided by the Chinese authorities are and how an investor in emerging markets should best interpret the data. Lukas – Canada  

Mark Mobius: From my experience, statistics in China can be just as reliable as statistics you can get in Canada or the U.S. China is a big country and the authorities need reliable data just like any government around the world. I believe the days are gone when the government deliberately wanted to manipulate the data for propaganda purposes. But even if you don’t believe the statistics, there are many ways to confirm and double-check. For example, we recently checked the export statistics of Brazil, Australia, the U.S., Germany and other countries in relation to China. Those numbers pretty much reflected the high growth and demand that we were seeing from the Chinese statistics. It’s always important to check and double-check statistics, because, even without manipulation, there can be statistical errors which creep into data, no matter what the source. Read more...

China is run by 8 engineers with help from 80 million Party members and 1.3 billion Chinese people. If you know an engineer you know how painfully honest they are about figures. And China's leaders have no reason to lie since they're not worried about being elected. In the USA, on the other hand,


things are different, as this post from the excellent blog, Econospeak, makes clear: 

Words to Hide the Obvious in Economics 
Posted: 18 Jul 2012 07:26 AM PDT
 One way to reveal the history of the changes in the economic landscape is to study how official meanings to key concepts have been altered over time.  "Knowing things that ain't so", as Josh Billings once said, presents much more trouble for folks as their simply being "ignorant".   Here are some words that I believe present great danger to the reader in their ability to hide the 'obvious':

•  Oil (2007 and after) “… the definition of "oil" was changed in 2007 to include synthetic liquids.[*]…” [1] [Not to confuse ‘oil’ with ‘energy’] “…there are at least 3 factors that are ignored in the total liquids graphs …. One - NGL's and ethanol have only 70% the energy that crude contains. Two - the EROEI of all liquids is dropping - fracking and deep water drilling, just to name two, require much greater inputs per unit of return than does conventional on-shore. Three - the population continues to grow, so per capita available net energy is what matters. And as a corollary to that, the portion of the global population that is reliant upon and has lifestyle expectations based on readily available liquid energy grows every year, so the call on the decreasing net available energy grows even more rapidly than does population itself. Only a graph that takes into account energy density, net energy and population can accurately paint a picture of the global liquid fuel situation.” [2] 

•  Retirement age: In the United States, while the normal retirement age for Social Security, or Old Age Survivors Insurance (OASI), historically has been age 65 to receive unreduced benefits, it is gradually increasing to age 67. For those turning 65 in 2008, full benefits will be payable beginning at age 66.[**] In France, the retirement age has been extended to 62 and 67 respectively, over the next eight years.[***]  In Spain, the retirement age will be extended to 63 and 67 respectively, this increase will be progressively done from 2013 to 2027 at a rate of 1 month during the first 6 years and 2 months during the other 9.[****]  [3] [**]  Normal Retirement Age [NRA] http://www.ssa.gov/OACT/ProgData/nra.html  [***]  "Pension rallies hit French cities". BBC News. September 7, 2010. http://www.bbc.co.uk/news/world-europe-11204528 [****]  "Spain to Raise Retirement Age to 67". The New York Times. January 27, 2011. http://www.nytimes.com/2011/01/28/world/europe/28iht-spain28.html  

•  Inflation: “The government used the same calculation for the CPI from 1913 to 1980.  In 1980, after seeing hyperinflation in late 1970s, the government changed the calculation and dropped food and energy from the Core Inflation Index While the U.S. government repeatedly states that we currently [2011] have about 1% inflation, by using the older pre-1980 government calculation of inflation, we find that the true inflation rate is closer to 10.7% as of May 2011 based on the SGS “Alternate CPI” calculation from shadowstats.com. [4] 

•  Unemployment…estimated long-term discouraged workers… were defined out of official existence in 1994 [in the US]. Short term discouraged workers are not included in the US ‘monthly headline number’ (U3) but only in the government’s broadest measure of UE at the Bureau of Labor Statistics (U6). [5] “Employed Person” US term for an individual 16 years old or older who, in a given week, (a) works minimum one hour for an emolument or minimum 15 hours of unpaid work in a family business, or (b) who is not working but has a job or business from which he or she is temporarily absent, whether or not being paid for the time off. [6] 

• Capitalism (1955) capitalism, n. …. the concentration of capital in the hands of a few, or the resulting power or influence…... a system favoring such concentration of wealth.[7] “Capitalism” (1941) “…An economic system in which capital and capitalists play the principal part; specif., the system of modern countries in which the ownership of land and natural wealth, the operation of the system itself, are effected by private enterprise and control under competitive conditions.” [8]  READ MORE, AND SEE REFERENCES for this article

As always, your comments are welcome and encouraged. Issues like this need more than just one opinion. And do feel free to add links to useful sources and stories!

More on Chinese Statistics:

Xinhua Insight: China advances reforms for data accuracy - Xinhua | English.news.cn - interesting, long article on changes to data collection, quite forthright about the problems with the accuracy of official statistics// BEIJING, Dec. 27 (Xinhua) -- Nearly 10 months after bypassing local governments to collect data directly from enterprises, the National Bureau of Statistics (NBS) has moved to build backup repositories for deep data analysis and processing. With one disaster recovery system going into operation at the NBS office this month, the NBS will soon install another backup repository to ensure both data safety and deep analysis in the event of disasters. The two systems, along with the National Data Center, which went into service in February to collect data directly from 700,000 enterprises, mark a milestone reform in China's statistical methodology