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Cracking the China numbers puzzle

Date

Peter Cai

China's much-anticipated second-quarter GDP growth figures have been released today, as you no doubt know.

You may also be aware that economists and market commentators had expected the numbers to be rather disappointing. (Or at least, they will match low expectations).

However, if you were keen to find out that magic growth number before its public release, there were couple of options available to you.

For one thing, there's often an early leak. Today it came from cnstock.com, which you can read here if your Mandarin is pretty good. Bloomberg, for instance, sent headlines on the cnstock.com GDP figures about six minutes before the formal release.

Needless to say, markets were already on the move after the "pre-release" headlines, with copper among the commodities rising. Within minutes of the official numbers hitting screen around the world, the Aussie dollar was up about one-third of a US cent while the Aussie sharemarket got a boost - short-lived, perhaps - to the tune of about $8 billion.

Death by banquet

Alternatively, you can either get yourself a psychic octopus or find it out from someone who knows these numbers (hints: officials from the central bank or the bureau of statistics), usually over an expensive banquet or five.

The Chinese government got really concerned in the last few years over the remarkable ability of some investment banks and media outlets to predict the key economic figures such as GDP, CPI, and import and export figures pretty much spot on before their public release.

(Many years ago, special "early" services could be subscribed to from the stats bureau - complete with receipts - although that little earner got wound up in a hurry. Xinjiang exile probably awaited the geniuses behind the venture.)

Regulatory agencies also noticed suspicious movements in the sharemarket before important central bank interest rate announcements.

An investigation was launched and resulted in the arrest and conviction of central bank and bureau of statistics officials and investment bankers.

The investigation reveals some tantalising details about the trade in classified economic data.

“A set of official economic data can fetch you anywhere between 400,000 and 500,000 yuan (between $60,000 and $70,000),” an unnamed persecutor told Chinese media.

The deputy head of the Chinese state secrets protection agency said in an interview that economic officials were invited to give so-called lectures at investment banks and trading houses for very handsome fees.

Some officials didn't even bother with such cover and chose to engage directly in insider trading with banks, he said.

Other Chinese media reports that bankers are happy to pay five-figure fees just to have dinner with officials who have access to sensitive economic data and information.

Bankers and brokers use this illegally obtained data to trade shares before their public release. The CPI figure is allegedly the most traded data, according to the Chinese media - although the sinking inflation rate means that number is less interesting than it once was.

Meanwhile, in Australia, BusinessDay understands that only selected Australian Treasury and Reserve Bank officials are briefed about the market moving economic data one night before its release by the Australian Bureau of Statistics.

13 comments

  • The growth number in China though welcome only indicates that it a hare and turtle story.

    Increasing pollution and inequality is a a high price to pay for too rapid economic expansion.

    The housing bubble cannot be sustained.

    The decline in agriculture will hurt China in the future.

    The lessons of Japan and the Asian Tigers have not been heeded. Slow and steady growth will ensure a more stable China whilst runaway growth leads to Boom and Bust.

    Commenter
    Chinese Dragon
    Date and time
    July 13, 2012, 1:37PM
    • This slowdown in growth is the lowest since the first quarter of 2009 during the depths of the global financial crisis. That's a FACT.

      But the positive spin is phenomenal. China will be crash landing in the coming months.

      Its completely delusional to think otherwise.

      You listening WA??

      Commenter
      Fonz
      Date and time
      July 13, 2012, 3:52PM
    • The new reality. Making positives out of negatives.

      Commenter
      The Oracle
      Location
      Oberon
      Date and time
      July 13, 2012, 4:36PM
  • Who cares about the Chinese pollution? Yawn button please. The critical thing here is that we continue shoveling out iron and coal and reaping the money honey!

    Commenter
    John
    Location
    St Kilda East
    Date and time
    July 13, 2012, 3:16PM
    • China can't save us this time round. We are going to have to fend for ourselves. We are headed for one hell of a bumpy ride as our chickens come home to roost. Pity the government cant subsidise all of our businesses to help weather the storm. Alas no, just the lucky few.

      Commenter
      Brisbane Bear
      Location
      Brisbane
      Date and time
      July 13, 2012, 3:20PM
      • "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."

        Wikileaks Cables.

        Commenter
        Allan
        Location
        Prahran
        Date and time
        July 13, 2012, 3:23PM
        • Great to see we have positioned our country to be reliant on a communist country (whose reporting for that reason cannot be trusted) at the expense of our own people and environment.

          Commenter
          Genghis
          Location
          Lounge
          Date and time
          July 13, 2012, 3:26PM
          • Boggles the mind the way the Chinese come up with these figures. The West is up to its eyeballs in fraudulent reporting - everywhere from Greece to Italy, the UK and The USA.

            Don't tell me China's instant figures are real.

            Only an absolute fool would believe that.

            They cannot survive without the consumptive power of Europe and the US. SO the game is up.

            Boom in Aus will be screeching to a halt soon enough.

            All the fat in this land will not save us this time.

            Commenter
            Benny
            Date and time
            July 13, 2012, 3:35PM
            • Too true - We've sold most of the fat in the land, not much left to save us.

              Commenter
              Genghis
              Location
              Lounge
              Date and time
              July 13, 2012, 4:08PM
          • Sustained debt, control the production of money, leverage peoples fear and the military, stay rich forever, make people envy you, make them constantly buy things they cant afford, Sustained debt, control the production of money, leverage peoples fear and the military, stay rich forever, make people envy you, make them constantly buy things they cant afford, Sustained debt, control the production of money, leverage peoples fear and the military, stay rich forever, make people envy you, make them constantly buy things they cant afford, Sustained debt, control the production of money, leverage peoples fear and the military, stay rich forever, make people envy you, make them constantly buy things they cant afford,

            I want off this terrible amusement ride!

            Commenter
            Mark C
            Location
            Melbourne
            Date and time
            July 13, 2012, 3:48PM

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