Goldman-Sachs: China is cooking the books. First up, Bloomberg:
“It is possible that local governments may have tried to boost exports data by either making round trips in special trade zones” or by exporting “earlier than otherwise in an attempt to improve the annual exports data,” Goldman Sachs’ Beijing- based economists Yu Song and Yin Zhang wrote the same day.
Rushed shipments and even faked exports to secure tax refunds may have contributed to the stronger growth data, according to Alistair Thornton and Ren Xianfang, Beijing-based analysts at IHS Inc. (IHS)
We’d have gotten a better spin on those exports numbers if only Walter Duranty were still around to report them — the Communists must really miss that guy.
All this comes via Zero Hedge, where Tyler Durden adds:
Is this an attempt to undermine the Chinese leadership which has so far merely sought to grow the economy by fiscal stimuli, while avoiding monetary ones: i.e., finally get the PBOC involved in not only growing the money supply (if not the economy), but in joining the rest of the world’s central banks in a race to debase? And if indeed this is the case, what happens when China begins growing its own local inflation in addition to importing everyone else’s.
Or is it a way to force a drop in a market that hangs on to every piece of good news like a drowning meth addict clutching at the tiniest of straws, allowing the same “skepticism-inducing” banks to buy at cheaper prices?
Or, more likely, is this merely a red herring to be used as a scapegoat when the latest dead cat bounce, so optimistically telegraphed by every sell side strategist, fails to materialize once more? After all: when in doubt, blame it all on the upcoming debt ceiling fiasco, and now: made up Chinese data.
Blaming the debt ceiling is so 2007 — not that President Obama isn’t afraid of being fashionably unfashionable — so it will be nice, I suppose, to blame China for a change.
During the Great Recession, China performed a major act of can-kicking with a trillion-dollar stimulus in a seven-trillion dollar economy. The best Washington could scare up was $800 billion of stimulus for an economy twice the size of China’s. The Chinese enjoyed the additional benefit of paying for theirs mostly with cash, thanks to their old-fashioned notion of putting money aside for a rainy day.
For a better perspective, China’s stimulus was proportionally two-and-a-half times the size of ours. And they adhered to the Keynesian Gospel, too, by paying cash instead of running up more debt.
And yet, just a few years later, they’re having to cook the books to hide just how bad things still are. With that, I think we can put this Keynesian stimulus nonsense to rest, forever.