Numbers Go Missing From China Factory Report Without Explanation; China No Longer Making Up Numbers, Now Simply Deleting Them

China No Longer Making Up Numbers, Now Simply Deleting Them

Tyler Durden on 07/02/2013 08:18 -0400

For many years, the Chinese politburo (not to be confused with the US Department of Labor) had a simple solution to accusations that central planning doesn’t work: just make up the economic numbers. However, a few months ago China found itself in hot water when it became impossible to pretend its manipulated numbers were even remotely credible, driven by a massive discrepancy between China exports to Hong Kong and HK imports from China. The immediate result by China, and the PBOC, as it attempted to regain some credibility was an drastic and epic move to force capital reallocation, in the process nearly wiping out its banking sector when interbank lending rates exploded to over 25%. For now, China appears to have regained some control even if the ensuing CNY1 trillion deleveraging that is imminent is sure to lead to unprecedented pain for the country that is more addicted to credit creation than any other. But in the meantime, China has once again fallen bank to doing what it does best: manipulating economic data, in this case the recently announced PMI. Only this time there is a twist: instead of goalseeking reported data to comply with some artificial reality that Beijing approves of, now China is simply flat out refusing to report numbers, period!

Numbers Go Missing From China Factory Report Without Explanation

By Bloomberg News – Jul 1, 2013

An official report on China’s manufacturing in June omitted numbers for export orders, imports and inventories of finished goods, without any explanation for the gaps. Five of 12 sub-indexes usually released with the Purchasing Managers’ Index were absent from today’s releases from the National Bureau of Statistics and the China Federation of Logistics and Purchasing. The others were for backlogs of work and quantities of purchases. The statistics bureau didn’t immediately respond to e-mailed questions asking for comment.Analysts seeking a fuller picture of China’s economy could turn to an English-language version of the report released in Hong Kong by the Fung Business Intelligence Center, which included the missing numbers. Inflated trade figures this year highlighted flaws and omissions in data that investors rely on for assessing the strength of the world’s second-biggest economy.

“We hope it’s just a hiccup, and we certainly want the data released to be consistent and comprehensive,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. He said the sub-indexes of export orders, imports and stocks of finished goods are “important” in reading the Chinese economy.

The Fung Business Intelligence Center, which is part of Fung Group, said in its monthly release that the export orders sub-index was at 47.7, which would be the lowest reading since February.

Both the official PMI and a gauge released by HSBC Holdings Plc declined in June, indicating weakness in manufacturing as officials grapple with a cash squeeze in the banking system.

The sub-indexes for exports, imports and inventories became available after the initial release in a separate data feed from the China Economic Information Service, said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong.

“The export and import sub-indexes are very important for economists to read the trade and economic situation,” Ding said. “They need to be a bit more consistent in releasing the data.”

To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net