Brad W. Setser and Arpana Pandey May 2009 Update - Understanding China’s External Portfolioarunsrinivasan wrote: I would suggest Brad Setser's blog for detailed analysis of China's holdings of US treasury, stocks etc.
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Brad W. Setser and Arpana Pandey May 2009 Update - Understanding China’s External Portfolioarunsrinivasan wrote: I would suggest Brad Setser's blog for detailed analysis of China's holdings of US treasury, stocks etc.
PS: A few more attacks against the Uighars and we might see the Taliban too start looking at Chinese targets.Is this a (farfetched) sinister western plot to get out of the Afghan firing line?Al-Qaeda vows revenge on China after riots
Jane Macartney in Beijing
Osama bin Laden’s Al-Qaeda network has taken up the cause of China’s Muslim Uighur minority with a pledge to attack Chinese workers in northwestern Africa in retaliation for mistreatment by Beijing of its largest Muslim minority.
Al-Qaeda's Algerian-based offshoot, al-Qaeda in the Islamic Maghreb (AQIM), has issued the call for vengeance, according to the South China Morning Post, which quoted an intelligence report from the London-based risk analysis firm Stirling Assynt.
It would be the first time that bin Laden’s organisation has threatened China or its interests — underlying the risks Beijing faces as it expands its economic investments overseas.
The assessment by Sterling Assynt warned that the threat should be taken seriously and said: “Although AQIM appear to be the first arm of al-Qaeda to officially state they will target Chinese interests, others are likely to follow."
The unrest in China’s westernmost Xinjiang region last week in which 184 people died — most of them Han Chinese killed by Uighurs — has elicited sympathy in much of the Muslim world for the minority Uighurs who face tight controls on their religious practices and discrimination in the workplace.
The report said: “The general situation of China's Muslims has resonated amongst the global jihadist community. There is an increasing amount of chatter . . . among jihadists who claim they want to see action against China. Some of these individuals have been actively seeking information on China's interests in the Muslim world, which they could use for targeting purposes."
The report is based on information from people who have seen the instruction from AQIM, the agency said.
The assessment comes amid rising fears among Western counter-terrorism officials that AQIM turned a deadly new corner in recent weeks, with a string of fatal attacks on foreigners. Its numbers appeared to have been buoyed by the return of its fighters from Iraqi battlefields, US officials have said.
Three weeks ago, AQIM attacked an Algerian security convoy protecting Chinese engineers on a motorway project, killing 24 paramilitary police. While the Chinese were not injured and were not targeted, the assessment notes: "Future attacks of this kind are likely to target security forces and Chinese engineers alike."
Security remains tight in Urumqi, capital of Xinjiang, after two Uighurs were shot dead by police yesterday and a third wounded in a street fight, the details of which remain unclear. Everyone in the city must now carry their identity card or driving licence or they will be taken away for interrogation.
One prominent Uighur intellectual, Ilham Tohti, an outspoken economist, disappeared from his Beijing home last week and a group of 158 Chinese writers, students and intellectuals have now issued a public appeal for his release.
In recent months Mr Tohti had sharpened his critique of problems in Xinjiang. The appeal said: “Professor Ilham Tohti is a Uighur intellectual who devoted himself to friendship between ethnic groups and eradicating conflicts between them. He should not be taken as a criminal.
The letter, drafted by the leading Chinese author and democracy activist Wang Lixiong, who has written about Xinjiang, said that the website founded by Mr Tohti had become a lively forum for discussion of Uighur life and views and was important for dialogue between Han Chinese and Uighurs.
Well as long as the Crusader George W. Bush was on the scene, it was easy to whip up emotions against the USA, but after Hussein decided to go to Cairo and kiss Muslim a$$, it becomes difficult to motivate people. In Iraq, Barack has withdrawn the American troops to the barracks. In Pushtun country it is the Pakistanis who have been doing the pounding, not just Americans. Guantanamo Bay is being closed. Besides it is an old war, and people have gotten all tired of the same rhetoric.Philip wrote:PS: A few more attacks against the Uighars and we might see the Taliban too start looking at Chinese targets.Is this a (farfetched) sinister western plot to get out of the Afghan firing line?
This conflict has been brewing for a long time. Interesting to watch what impact it will have on Chinease foreign policy in general and Pakistan in particular. Will it be able to afford a Pakistan or Iran with nuclear bombs. How will the Muslim world react to the Chinease treatment of the Uighurs? and what steps will the OIC take. So far China has been the darling of the Muslim world, mostly becasue it has been outside the Bush camp.Philip wrote:Al Q to the rescue! Al Q is now targeting Chinese workers in Africa in revenge for the pogrom against the Uighars.Perhaps China has bitten off more than it can chew,as its workers,especially in construction projects,are scattered all across the globe,mainly in developing countries many of which are Muslim.For example in Cabinda,where it is scooping out a treasure vault of mineral wealth,including uranium,diamonds and oil (thanks to the Angolan army squatting there supressing the natives),there will be about 20,000 Chinese workers housed there for the job.In the states that are Muslim,Chinese workers might now find themselves as targets from a hostile local population,let alone Al Q!
http://www.timesonline.co.uk/tol/news/w ... 704812.ece
PS: A few more attacks against the Uighars and we might see the Taliban too start looking at Chinese targets.Is this a (farfetched) sinister western plot to get out of the Afghan firing line?Al-Qaeda vows revenge on China after riots
Jane Macartney in Beijing
Osama bin Laden’s Al-Qaeda network has taken up the cause of China’s Muslim Uighur minority with a pledge to attack Chinese workers in northwestern Africa in retaliation for mistreatment by Beijing of its largest Muslim minority.
Al-Qaeda's Algerian-based offshoot, al-Qaeda in the Islamic Maghreb (AQIM), has issued the call for vengeance, according to the South China Morning Post, which quoted an intelligence report from the London-based risk analysis firm Stirling Assynt.
It would be the first time that bin Laden’s organisation has threatened China or its interests — underlying the risks Beijing faces as it expands its economic investments overseas.
The assessment by Sterling Assynt warned that the threat should be taken seriously and said: “Although AQIM appear to be the first arm of al-Qaeda to officially state they will target Chinese interests, others are likely to follow."
The unrest in China’s westernmost Xinjiang region last week in which 184 people died — most of them Han Chinese killed by Uighurs — has elicited sympathy in much of the Muslim world for the minority Uighurs who face tight controls on their religious practices and discrimination in the workplace.
The report said: “The general situation of China's Muslims has resonated amongst the global jihadist community. There is an increasing amount of chatter . . . among jihadists who claim they want to see action against China. Some of these individuals have been actively seeking information on China's interests in the Muslim world, which they could use for targeting purposes."
The report is based on information from people who have seen the instruction from AQIM, the agency said.
The assessment comes amid rising fears among Western counter-terrorism officials that AQIM turned a deadly new corner in recent weeks, with a string of fatal attacks on foreigners. Its numbers appeared to have been buoyed by the return of its fighters from Iraqi battlefields, US officials have said.
Three weeks ago, AQIM attacked an Algerian security convoy protecting Chinese engineers on a motorway project, killing 24 paramilitary police. While the Chinese were not injured and were not targeted, the assessment notes: "Future attacks of this kind are likely to target security forces and Chinese engineers alike."
Security remains tight in Urumqi, capital of Xinjiang, after two Uighurs were shot dead by police yesterday and a third wounded in a street fight, the details of which remain unclear. Everyone in the city must now carry their identity card or driving licence or they will be taken away for interrogation.
One prominent Uighur intellectual, Ilham Tohti, an outspoken economist, disappeared from his Beijing home last week and a group of 158 Chinese writers, students and intellectuals have now issued a public appeal for his release.
In recent months Mr Tohti had sharpened his critique of problems in Xinjiang. The appeal said: “Professor Ilham Tohti is a Uighur intellectual who devoted himself to friendship between ethnic groups and eradicating conflicts between them. He should not be taken as a criminal.
The letter, drafted by the leading Chinese author and democracy activist Wang Lixiong, who has written about Xinjiang, said that the website founded by Mr Tohti had become a lively forum for discussion of Uighur life and views and was important for dialogue between Han Chinese and Uighurs.
RajeshA wrote:Well as long as the Crusader George W. Bush was on the scene, it was easy to whip up emotions against the USA, but after Hussein decided to go to Cairo and kiss Muslim a$$, it becomes difficult to motivate people. In Iraq, Barack has withdrawn the American troops to the barracks. In Pushtun country it is the Pakistanis who have been doing the pounding, not just Americans. Guantanamo Bay is being closed. Besides it is an old war, and people have gotten all tired of the same rhetoric.Philip wrote:PS: A few more attacks against the Uighars and we might see the Taliban too start looking at Chinese targets.Is this a (farfetched) sinister western plot to get out of the Afghan firing line?
India too is old hat, but it is hardly the Muslim-hating Superpower to go and hit.
Al Qaeda needs something more challenging, something new. China fits the bill. A Godless Muslim-bashing Superpower occupying Muslim lands is perfect.
The exhaust pipe had to change directions.
Yes but one person always leads in any dance (I did actually learn the tango) it has to be that way. No points for guessing who I think that is.SwamyG wrote:They have to tango.
The unrest in Xinjiang and arrest of a foreign corporate executive show that China is not ready to lead.
Just before the 2007 Chinese Communist Party Congress, Premier Wen Jiabao had sharp words for those agitating for internal political reform. In a much-quoted speech, he told a gathering of policymakers and intellectuals that China would not be ready for democracy for 100 years. Events over the past week suggest Wen was right, that China is not ready for democracy -- and that it might not be ready for leadership in the region, let alone the world, for perhaps as long.
Many influential thinkers in China hold lofty, impatient ambitions for their country. Several months ago, for instance, a group of state-sponsored Chinese scholars released a bestselling book titled Unhappy China: The Great Time, Grand Vision, and Our Challenges. It argued that, given China's growth, it should put prudence aside, break away from Western influence, and come to recognize that it has the power to lead in Asia.
But this is by no means the overwhelming consensus among Chinese thinkers. One high-profile critic of the book is Hu Xingdou, a highly respected economics professor at the Beijing Institute of Technology. Hu called the book's publication a sign of the "ideological chaos" in China and derided the rise of extremist political strains. Further, he argued that China is not ready to lead because its "value systems" -- cultural, ideological, and political -- are not yet part of the regional mainstream. Beijing's example is not an attractive one for other countries. Subsequently, China lacks the ample reserves of "soft power" required for real world leadership.
Two events in the past week support the argument that China needs to develop internal political stability and allow for productive dissent and competition before it begins exporting its cultural, ideological, and political fruits.
Related
First, the disruption in Xinjiang. The situation there is as complex as is in Tibet and involves trespasses against both Han Chinese and indigenous Uighurs. But the root causes are historical animosity and the systematic suppression of ethnic minorities. In China, Beijing has a genuinely held stated goal of social "harmony," aiming to foster peaceful relations between its ethnic nationalities. But in practical terms, Han Chinese constitute 90 percent of the population and remain dominant in all aspects of society, economics, and politics. Beijing's respect for minority cultures and rights remains superficial at best.
There is no better example than the children in traditional dress representing 56 ethnic groups, paraded to the world at the opening ceremony of the 2008 Olympic Games. It was subsequently discovered that the children were all Han Chinese.
Then there's the arrest of Stern Hu, an executive for British-Australian mining giant Rio Tinto. This second event is deeply worrying: China has charged the Shanghai-based Australian citizen (who is of Han heritage) with espionage, alleging that he illegally obtained commercial information related to Chinese steel mills' bids for iron ore. The timing of the arrest, shortly after a failed proposal by state-owned Chinalco to increase its stake in Rio Tinto, seems especially suspect.
Moreover, even if Stern Hu did illegally obtain such information, it seems absurd to imply that he caused a serious economic loss to the Chinese state or harmed the country's national interests. The charge of espionage, rather than larceny, confirms that Beijing has grave difficulty separating the public and the private -- keeping national and security interests distinct from commercial and business ones. Laws are phrased ambiguously and offer officials wide discretion in their application. This incident also demonstrates Beijing's tendency to use its laws for political purposes. And the Chinese Communist Party's complete control of the courts means that the judicial due process in China to which Stern Hu will be subject is not exactly the "rule of law."
Both incidents send a message, strong if implicit, to China's neighbors: The country overreacts to moderate threats, preferring a strong arm to a skilled hand in everything from minority groups to economic competition. It is the wrong message to send if China intends to supplant the United States as the regional hegemon.
For China to lead, other Asian states need to accept the legitimacy of Chinese leadership -- including its political and policy value systems. Although some Asian countries may find Washington's rhetoric shrill, they accept that the United States provides a stable, fair, open, rules-based, and liberal order. But Beijing remains closed, intolerant, vengeful, and overbearing. Unless compelled by force or left no choice due to a U.S. withdrawal from the region, Asian states will not accept such a leader.
Much has been said about the advances made by Beijing in building its soft power, but China has plucked only low-hanging fruit. It has convinced the region that it is a legitimate rising power and hopes to convince the region that its emergence should be accommodated. China has a long way to go, however, before Asia believes Beijing really has the ideology and the credentials to lead. If Premier Wen gets his way, it could take 100 years.
OT.arunsrinivasan wrote: China's One Hundred Years of Ineptitude
I am not so sure about this. Pakistan will not support the Uighurs at any cost. Their own previous actions against their brethren in Bangladesh has not stopped them from proclaiming themselves to be global champions of Islam, so what makes the folks at BRF believe that China killing Muslims will stop them from doing so.Suppiah wrote:This Xinxiang issue is "tails you win, heads I lose" thing for TSP. Because if they let the Uigurs down, their claim of being global champion of Islam and Jehad GHQ sounds hollow. If they support, covert or overt, they antagonise their all weather friend.
Suppiah ... I don't think anyone (and I do mean ANYONE) outside of TFTA Pakistanis consider the Pakis to be champions of Islam. They are self-proclaimed champions and this unrest will not stop them from continuing to claim so ...Suppiah wrote:That's precisely why I said the claims would sound hollow, did not say they will stop claiming. Also their claims would be hollow to increasing number of Muslims in this region and elsewhere, which is what matters. Not to us here at BRF. For us we know them too well anyway...
Also here we have to define PAK quite carefully...yes the regime will not support Uigurs but their unofficial vanar sena of Jehadis, talibans, mullahs, terrorists, ex-or current ISI jehadis etc, assorted fanatic barbarians, would. They would have neither the bandwidth nor the will to stop that. Which puts them on collision course with PRC. Incidentally this is exactly the situation as re Al-Qaeda and the rest. Zawahri calls TSP rulers kafir because they are siding with enemy and going after fellow jehadis. The Kafirs know or are convinced that TSP is still running with hare, not hunting with hound. Again heads you win, tails I lose!
Certainly no “Muslim Outrage” in the Islamic Republic of Pakistan, more the reverse as the Islamic Republic of Pakistan sells fellow Muslim Uighur’s down the river:Sanjay M wrote:Unrest in Xinjiang: Where’s the Muslim outrage?
All this change from a iron grip over the population and opening up internally and to the world of commerce and education is going to be CCP's nemesis!!Public trust in China at a new low
BEIJING, Aug 5 — Sex workers are more trustworthy than government officials. And state-published data is “largely falsified”.
China at a New Low in Public Trust
Last October, a new Chinese-built US$241 million communications satellite called Simon Bolivar or Venesat-1 was launched from China's Xichang Satellite Launch Center in southwestern China on a CZ-3B rocket. It is owned by Venezuela. Uruguay also obtained a 10% stake in this satellite because Venesat-1 now occupies an orbital slot - essentially a parking space for a satellite approximately around 35,900 kilometers above Earth - assigned to Uruguay.
Unfortunately, a week after Venesat-1 was launched, Nigcomsat-1 ceased to operate. (See Nigeria's Chinese-built satellite goes dark Asia Times Online, November 17 2008)
Venesat-1 is a so-called DFH-4. Over the past three years, two other DFH-4 satellites have suffered total failures including the above-mentioned Nigcomsat-1.
Several critics of this satellite program in Venezuela and elsewhere do not believe what they are hearing from Chacon and URSEC. These people have spent months arguing that Venesat-1 is not operating properly, and that an official cover-up is underway. Because only three state-owned TV channels along with a few other occasional TV programs are being transmitted by this very large satellite, something is seriously wrong here, their argument goes.
"No one is talking about it in official circles and the media is just waiting for an announcement of the failure or the start of operations by year end. That piece of junk is doomed, only politics is keeping it alive artificially," said one critic. "They are paying thousands of US dollars for [access to foreign-owned satellites] just for state TV, and they just renewed the contract and wanted more space for Internet service which is currently unavailable."
Here is a one brief sample of the kind of negative comments that are constantly made about Venesat-1.
"On Friday, the signal returned to Venezuela for the first time since July 7. Today, gone again. We are fishing for it to find out where it went. We now think the satellite is oscillating slowly on its axis. Who knows, mysteries are the signature of that satellite," said one observer from Venezuela in the final week of July.
The fact that most if not all of these critics appear to be staunch opponents of Chavez makes the process of sorting out the facts from afar in this instance quite a challenge.
In May, when this writer was first presented with evidence that Venesat-1 was not operating properly, an e-mail was sent immediately to CGWIC headquarters in Beijing to determine what was really happening. In less than an hour, the following response arrived from Beijing.
"CGWIC hereby confirms that the VeneSat-1 satellite is under normal and healthy operation. If anything unexpected happens to the satellite, CGWIC will keep the public informed, just as CGWIC has done with the NigcomSat-1 satellite. On the day following the in-orbit failure of NigcomSat-1 satellite, CGWIC immediately released the news to the public," said a CGWIC spokesperson.
An engineer in Colombia who has monitored Venesat-1 transmissions for months, confirms that a very small amount of TV programming is being beamed down from Venesat-1, while at the same time, he cannot find any trace of the satellite Internet traffic that Chacon describes. One US satellite expert concludes that while this engineer's account raises questions, further evidence needs to be gathered.
None of this 'brewing situation' is really new. The Uighurs and Hans have been going at it since the Qing. This also isn't the first time the plight of uighers has entered al-queda's consciouness (zawahiri has specially mentioned the Turkestan's cause in previous audio recordings). Additionally, this isn't the first time it has entered some parts of the Muslim world's consciousness. For example, in the past Turkey had provided asylum to many Uigher dissidents much to the chagrin of China. And this also isn't the first time that Pakistan has turned their back on the Uighurs as Musharraf has happily extradited Uighur resistance fighters training in LeT camps to the Chinese. Yet duplicitious Pakis still champions itself as a 'protector of Islam.' Go figure. What is changing and more importantly unfortunately for Uighur's nationalistic aspirations, is that their biggest supporter-Turkey-is beginning to demonstrate a more pragmatic approach to foreign relations with China. Will the Turkish continue to provide asylum to Uighur dissidents as they ahve in the past or will they turn on their Turkic speaking brothers? Only time will tell.I think the brewing situation in Turkestan is good for India.
1. Nails Pakistan claims of protectors of Islam, because by not supporting Uighurs, their claim against Kashmir as an islamic issue weakens considerably. Now rest of islamic world does not give too much attention to it and thinks it is a bilateral issue
2. Diverts Al-Qeada attention to it.
Uighur exile airs prison killing allegation
(AFP) – Aug 24, 2009
WASHINGTON — Rebiya Kadeer, the leader of China's Uighur minority in exile, has highlighted a report that nearly 200 inmates were "tortured" to death in prison.
The allegations came as a war of words intensifies between Beijing and the 62-year-old former businesswoman. China has accused her of instigating recent unrest in northwestern Xinjiang region, charges she adamantly denies.
Kadeer, who lives in the Washington area, said Monday she received a fax from a Uighur policeman who fled to nearby Kyrgyzstan and gave a grim account of Urumbay prison south of the city of Urumqi.
The policeman said that 196 Uighurs detained in a clampdown in the region "were tortured and killed" at the detention center, according to Kadeer. .......................
AFP via Google
It's an open secret that China has doctored its economic and financial statistics since the time of Mao. But could it all go south now?
In February, local Chinese Labor Ministry officials came to "help" with massive layoffs at an electronics factory in Guangdong province, China. The owner of the factory felt nervous having government officials there, but kept his mouth shut. Who was he to complain that the officials were breaking the law by interfering with the firings, he added. They were the law! And they ordered him to offer his workers what seemed like a pretty good deal: Accept the layoff and receive the legal severance package, or "resign" and get an even larger upfront payment.
"I would estimate around 70 percent of workers took the resignation deal. This is happening all over Guangdong," the factory owner said. "I help the Department of Labor, and they'll help me later on down the line."
Such open-secret programs, writ large, help China manipulate its unemployment rate, because workers who "resign" don't count toward that number. The government estimates that roughly 20 million migrant factory workers have lost their jobs since the downturn started. But, with "resignations" included, the number is likely closer to 40 million or 50 million, according to estimates made by Yiping Huang, chief Asia economist for Citigroup. That is the same size as Germany's entire work force. China similarly distorts everything from its GDP to retail sales figures to production activity. This sort of number-padding isn't just unethical, it's also dangerous: The push to develop rosy economic data could actually lead China's economy over the cliff.
Western media outlets often portray Chinese book-cooking as part and parcel of a monolithic central government and omnipotent Beijing bureaucrats. But the problem is manifold, a product of centralized government as well as decentralized officials.
Pressure to distort or fudge statistics likely comes from up high -- and it's intense. "China announces its annual objective of GDP growth rate each year. In Chinese culture, the government has to reach the objective; otherwise, they will 'lose face,'" said Gary Liu, deputy director of the China Europe International Business School's Lujiazui International Financial Research Center. "For instance, the government announced that it wanted to ensure a GDP growth rate of 8 percent in 2009, and it has become the priority for government officials to meet that objective."
But local and provincial governmental officials are the ones who actually fiddle with the numbers. They retain considerable autonomy and power, and have a self-interested reason to manipulate economic statistics. When they reach or exceed the central government's economic goals, they get rewarded with better jobs or more money. "The higher [their] GDP [figures], the higher the chance will be for local officials to get promoted," explained Liu.
Such statistical creativity is nothing new in China. In 1958, Chairman Mao proclaimed that China would surpass Britain in steel production within 15 years. He mobilized villages throughout China to establish backyard steel furnaces, where in a futile attempt to reach outrageous production goals, villagers could melt down pots and pans and even burn their own furniture for furnace fuel. This effort produced worthless pig iron and diverted enough labor away from agriculture to be a main driver in the devastating famine of the Great Leap Forward.
Last October, Vice Premier Li Keqiang said in a speech after inspecting China's Statistics Bureau, "China's foundation for statistics is still very weak, and the quality of statistics is to be further improved" -- a brutally harsh assessment coming from a top state official.
Indeed, China has predicated its very claim of being the healthiest large economy in the world on faulty statistics. The government insists that even though China's all-important export sector has been devastated -- contracting about 25 percent in the past year -- a massive uptick in domestic consumption has kept factories producing and growth churning along. A close examination of retail sales and GDP growth, however, tells a different story. China's domestic retail sales have risen about 15 percent year on year, but that does not really translate into Chinese consumers purchasing 15 percent more televisions and T-shirts. The country tabulates sales when a factory ships units to a retailer, meaning China includes unused or warehoused inventory in its consumption data. There is ample evidence that state-owned enterprises buy goods from one another, simply shifting products back and forth, and that those transactions count as retail sales in national statistics.
China's retail statistics seem implausible for other reasons, too. They would imply an increase in salaries among Chinese people, allowing them to purchase that extra 15 percent. To be sure, the Statistics Bureau reported salaries had increased 12.9 percent in the first half of 2009. But Chinese netizens complained such numbers were hard to believe -- as did the bureau's chief.
A look at GDP growth also raises serious questions. China's economy grew at an annualized 6.1 percent rate in the first quarter, and 7.9 percent in the second. Yet electricity usage, a key indicator in industrial growth and a harder metric to manipulate, declined 2.2 percent in the first six months of the year. How could an economy largely dependent on manufacturing grow while its industrial sector shrank?
It couldn't; the numbers don't add up. China announced a $600 billion stimulus package (equal to about 14 percent of GDP) last fall. At that point, local governments started counting the dedicated stimulus funds in GDP statistics -- before finding projects to use the funds, and therefore far before the trillions of yuan started trickling into the economy. Local governments keen to raise their growth and production numbers said they spent stimulus money while still deciding on what to spend it, one economist explained. Thus, China's provincial GDP tabulations add up to far more than the countrywide estimate.
Alternative macroeconomic metrics, such as the purchasing managers' index (PMI), which measures output, offer a no more accurate reflection. One private brokerage house, CLSA, compiles its own PMI, suggesting a sharp contraction in industrial output between December 2008 and March 2009. Beijing's PMI data, on the other hand, indicated that industrial output was expanding during that period.
Unfortunately, such obfuscation means China's real economic health is difficult to assess. Most indicators that would help an intrepid economist correct the government numbers -- progress on infrastructure projects, end-user purchases, and the number of "resigned" workers -- are not public.
Still, it is possible to infer the severity of the gap between economic reality and China-on-paper by looking closely at monetary policy. China's state-owned banks dramatically increased lending in the first half of 2009 -- by 34.5 percent year on year, to more than $1 trillion. This move seems intended to keep growth artificially high until exports bounce back. Most analysts agree that it is leading to large bubbles in the stock, real estate, and commodity markets. And the Chinese government recently announced plans to raise capital requirements -- an apparent sign it sees the need to reign in the expansion.
For the long term, China is banking on its main export markets -- in the United States, Europe, and Japan -- recovering and starting to consume again. The hope is that in the meantime, rosy economic figures will placate the masses and stop unrest. But, if the rest of the world does not rebound, China risks the bursting of asset bubbles in property and stocks, declining domestic consumption, and rising unemployment.
That's when the Wile E. Coyote moment could happen. Once Chinese citizens no longer believe that the economy is doing well, social unrest and more widespread worker riots -- already increasing in scope and severity -- are likely. That's something that China will have a harder time hiding. And then we'll know whether China's statistical manipulation was a smart move or a disastrous mistake.