This would make Enron look like a walk in the park. New cable releases from Wikileaks say the Chinese essentially fabricate their GDP figures:
4. (C) GDP figures are “man-made” and therefore unreliable, Li said. When evaluating Liaoning’s economy, he focuses on three figures:
1) electricity consumption, which was up 10 percent in Liaoning last year;
2) volume of rail cargo, which is fairly accurate because fees are charged for each unit of weight; and
3) amount of loans disbursed, which also tends to be accurate given the interest fees charged.
By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are “for reference only,” he said smiling.
This is interesting on several levels. We know that James Chanos, the same man who originally uncovered the Enron scandal, has been hinting at fraud in China for some time. We also know that the Chinese growth since 2009 has been largely government/stimulus driven. This country, which needed no stimulus at the time, ramped up government spending in order to continue their policy of simply building things for the sake of creating economic growth. The result has been a spectacular level of overcapacity. The world’s largest shopping mall is empty. They have enough commercial office space to build a 5X5 cubicle for every citizen in China, etc. All of this has to make one wonder if the growth story in China isn’t dramatically overstated.
I am generally quick to dismiss commentary like this that resembles conspiracy theory more than anything else, but at some point the numbers just stop adding up and you have to begin wondering if there isn’t more to this whole story….