China Is Overstating Its GDP | My Reaction: Yes It Is!

A video from Cash And Macro discusses how is overstating its GDP by a minimum of 60%. Might be really true, but here is what matters for us financiers.

0:00 Overstating GDP
1:47 Night Lights
3:47 Overemphasizing GDP
6:28 Program Me The Cash

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China Is Overstating Its GDP | My Reaction: Yes It Is!

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About the Author: Richard Money

46 Comments

    1. Still beating us in exports. Real, not speculative or financial health of an economy is only determined by physical capacity. This is especially the case in an authoritarian economic regime.

      GDP only correlates to financial health not to physical capacity.

    2. Exports are misleading for very large countries. Eg look at the trade between California and Texas. It’s BIG – and they’re trading very different things. But it doesn’t show up on export-import figures. Even though, really, its hardly any different from those states trading those same things with eg the EU.

  1. Hi Sven! I happened to know quite a lot of people closely related to Chinese politicians, government owned companies and larger private companies. I was told that when local mayor can’t meet the annual growth target they just build a new overpriced building or destroy an already existing one and then rebuild it. Big bosses in the electric grid and energy companies are constantly draining the companies bank accounts into their and political friends pockets through overpriced projects and maintenance. Also, there is always a political figure from communist royalty families behind any of the publicly traded companies otherwise the company won’t be allowed to grow. The political figure makes all important decisions about the company, sets the frame, and makes sure there is a constant flow of money to support the growth. They also play with the accounting books quite a lot to prove how great they are – sometimes this can be seen very easily but sometimes it is well hidden. This is how the communism works everywhere in the world and the final result is always the same. Many times I was on the edge to invest in some of the famous Chinese tech companies but never did it because of the above reasons.

    1. @Manos Demirtzis you can’t really compare the two. In communism it has a different dimension. Corruption is almost everywhere.

    2. @Hein Aye A very similar and great example of unbelievable western corruption is my country manipulated their Debt, GDP and other economic metrics just to enter the Eurozone. The European Union knew about it and allowed it to happen so they can add one more market into their system. And i am 100% sure nor my country or Eu is communist. Hence i stand by my comment😁B4 you start blindly label things as communism please study the original definitions. Its gonna be enlighting and educational!

    3. @Value Investing with Sven Carlin, Ph.D. Retired glass factory director told me he was forced to take farmers from Bosnia as experts and than had to hire more locals from Pula to supervise Bosnians not to burn factory. Great times

  2. What investors have to consider in the current environment is the US anti-china media campaign (as part of a multi-layer campaign) in mass media but also within many institutions.

    1. @Value Investing with Sven Carlin, Ph.D. Exactly. To measure economic activity one might want to look at imports and exports, what goes physically into the country and out. Plus the movement of goods inside a country (volume of transported goods via railway, truck, airplane). Electricity use is also an indicator (that’s up for China even this year, if I remember corretly). We have to distinguish between real data and the US sponsored anti-china campaign (U.S. congress aproved a budget for that last year for 2021-2026), leading to alot of “china rar rar” youtube channels popping up.

  3. Very intelligent explanation. I am happy that i subscribed your channel and getting quality insights. Keep up the great work!

  4. The absolute number of each report means very little but if the methodology of the calculations stay the same then the trend and rate of change should be of great value – but you have to keep an eye on changes to the methodology. The same applies to every company earnings report.

  5. You suggest that every other country is also overstating their GDP. Do you have a source for this? I’d be interested in understanding more about that point.

    1. unfortunately, I am not an academic, I just look at what is useful data for me and what not. At the end most of it is relative, because the ways it is measured are not really the best way or most precise!

  6. According to my most important economic indicator “hamburger consumption per capita” Chinese GDP is smaller 100 times than its actually stated! Trust me, i am an academic economist!

    Another beautiful video Sven. One useful life lesson that applies to this situation, is that correlation doesn’t imply causation.

  7. Wonderful video, it gave me a new perspective on how to look at GDP. Therefore, thank you for a new source of knowledge =]

  8. That the Chinese are good cooks I have no doubt. What I mean is they are cooking their statistics.

    Not only is their economy smaller but also is their population. By how much, I do not venture to guess.

    But one thing’s for sure: I am happy to not be invested in China. Those who went in heavy, believing the hype, are gnashing their teeth now. ☮️

  9. My biggest advice is to always seek the services of a professional just like I did when I ventured into it for the first time.

    1. @Big Elbow I heard someone mention her name on one or two occasions. I think I might just give it one last try.

    2. @Jasper Flontes I feel this is quite an easy one. You already have her name which makes it easy for you. Just look up her name online. I’m sure you will come across her. That’s how I found her too.

    3. I just looked up her name online. she is licensed with credible certificates and has an amazing track record. Thank you for the message. It’s not everyday you come across informations like this lol😂

  10. china is in expansion mode, they are expanding their footprint via investment in Africa, Srilanka, Afganistan, australia and even germany… they are building up strategic advantage which will ensure that they grow and expand beyond their domestic market and their beyond manufacturing…

  11. Most rich people stay rich by spending like the poor and investing without stopping then most poor people stay poor by spending like the rich yet not investing like the rich but impressing them

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