On Chinese Accounting

Excellent post on the quality of Chinese numbers, corporate as well as gdp. Nothing new, but the author gives a good overview on the implications. Interestingly – and somewhat news to me – the Chinese are well aware of this, contrary to most western observers (and corporate CEOs) who still think China is going to take over the world. From the post,

Inside China, it is taken for granted that the statistics are worthless and has been for many years. I was first alerted to questionable data not by academic research, a troublesome foreigner, or journalist but by my students. They were in disbelief that a professor would actually believe official Chinese data as everyone already knows the data is manipulated.

Regardless of whether you believe this is going to end badly or not, I think we agree that China is a fascinating place.

People in (western) Europe, or the US have the unfortunate habit of trusting their government. This is why they tend to believe official statistics even though locals do not – a costly error in many a EM crisis. In the past this trust might have been justified, but now…

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