The Truth About China's GDP Numbers

Dec. 13, 2010 9:19 AM ETFXI, GXC, PGJ3 Comments
Jim Trippon profile picture
Jim Trippon

Some people will grab at any opportunity to bury their heads in the sand. It's hard for some to accept the fact that China is rising and U.S. influence is on the decline. A century ago it was just as inconceivable to many Britons that the sun was setting on the British Empire. The American century had begun. That's why scores of Internet pundits pounced on the latest WikiLeaks allegation that China's GDP figures were "man-made." "Fraud," they declared. Smugly they wrote that they knew it all along.

To many it must have seemed an open and shut case. The source of the quote was none other than vice premier Li Keqiang, the very man slated to become China's next premier, after Wen Jiabao steps down. Mr. Li's famous comments were made at a dinner in Beijing with then-U.S. Ambassador Clark Randt on March 12, 2007. Li'ss remarks focused on the challenges he faced when administering the province of Liaoning. Because of its legacy of failed state-owned enterprises, Liaoning was burdened with a huge number of unemployed workers.

As the Communist Party secretary for the northeastern province he often received inflated growth reports from party members who were eager to fill a quota or please their superiors. Li, to his credit, ignored the inflated numbers and relied on hard-to-fake indicators.

According to the leaked cable, Li used three metrics for a realistic view of growth:

  1. Electricity consumption (which was up 10 percent in Liaoning in 2006)
  2. Volume of rail cargo, which is accurate because fees are charged per unit of weight
  3. Loans disbursed, which is accurate because interest fees are precise

Horrified U.S. commentators took one look and cried foul. One shocked China pundit called China's double-digit growth statistics a "sinister fairy-tale." Another concluded that China's growth figures were "fabricated" and wondered "if the growth story

This article was written by

Jim Trippon profile picture
Jim Trippon, CPA, is the editor-in-chief of China Stock Digest (, America's #1 performing China investment newsletter as ranked by Dow Jones - Hulbert Financial Digest. All of the stocks covered by China Stock Digest ( may be purchased by US investors in US based retail brokerage accounts. A professional investment manager, Trippon has worked extensively inside China, and maintains a permanent team of financial analysts in Hong Kong, Shanghai, and Beijing. He leads an annual China Investors Fieldtrip each October and his new book Becoming Your Own China Stock Guru ( was recently released by John Wiley & Sons.

Recommended For You

Comments (3)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.