Top down communist economies always wind up with false financial data. As an example, the Soviet Union apparatchik constantly drove manufacturing plants to produce more than the last quarter, but the problem with top down government-run economies is they suck economically, mainly because they take the human element out of their central planning. In fact, central planning is the common denominator of all communist/socialist governments and it’s the number one reason for failure.
In this case, manufacturing plant managers were afraid to report bad numbers, so they lied on government stats to avoid government reprisals, or a one-way ticket to gulag in Siberia. This is why a short time before the collapse of Soviet communism the CIA came out with a white paper claiming the Soviets were soon going to out-manufacture the United States.
We’ve known for some time now that there are whole modern ghost cities built in China where not a single person lives or works. Communism always brings government forcing the manufacture of things nobody needs or wants, and in this case people needed jobs, so the government had workers build cities to provide jobs, but the cities are not being used. This planned obsolescence was a colossal waste of money. And some people in the West have always suspected that the Chinese government has faked their financial data.
(Via: The Daily Caller)
The Chinese government faked financial data for years, Chinese media reports.
Foreign observers have long been suspicious of China’s economic data, and those suspicions may very well be justified. The governor of Liaoning province admitted that some provincial economic figures from 2011 to 2014 were fabricated, the People’s Daily reported Wednesday.
“Many cities and counties in Liaoning province reported widespread fraudulent economic figures,” Gov. Chen Qiufa revealed at the eighth meeting of the 12th People’s Congress in Liaoning.
Some fiscal revenue data was inflated by as much as 20 percent.
Shenyang, the capital of Liaoning province, reported a fiscal revenue of $351 million in 2013; however, the actual figure was closer to $160 million. A report from the National Audit Office showed that falsified data was rampant throughout the province.
More disconcerting is that the falsification of fiscal data may not be limited to one Chinese province and could be a nationwide concern.
“It’s not only happening in Liaoning, but other provinces as well, as local governments are under pressure to show positive GDP figures,” Feng Liguo, a China Enterprise Confederation expert, told the Global Times.
Recent revelations cast doubt over China’s 2016 GDP growth report scheduled to be released Friday. The Chinese government asserts that it achieved 6.7 percent growth last year — the accuracy of such reports is questionable.
Economists and investors often use foreign proxy indexes to analyze China’s growth.
China’s economic growth has been slowing in recent years. The Chinese government refers to the slowdown as the “new normal,” regarding the deceleration as a byproduct of the country’s attempts to restructure domestic economic engines.
While these changes are jarring, the government still expects and demands high growth figures, putting pressure on provincial and local officials to perform or, at least, make it look like they are performing.