Read the fine print|Michelle Ng

Read the fine print Michelle Ng

“Dongguan (東莞)after the exodus of manufacturing; only shuttered stores and deserted streets remain,” (

“Yiwu (義烏) running on rationed electricity: dormant factories, half-lit supermarkets and restaurants that serve meals in the dark.” (

So go the titles of two of the many videos on Youtube chronicling the decline of China’s once-vibrant manufacturing hubs. Over the past couple of years, in some quarters of social media, it has become a sport to view such videos with ghoulish delight.

The contrast between these videos and the headlines one sees in Chinese state media couldn’t have been more stark.

“China’s Q1 GDP grows 18.3% y-o-y, the fastest in three decades,” the Global Times proclaimed triumphantly last month.

“The country is likely to record the highest growth among major economies and make the greatest contribution to the global economy in the first quarter, on top of the US,” the paper envisioned.

How can we reconcile irrefutable evidence of troubled businesses countrywide with the CCP’s own spectacular economic data?

Independent mainland economist Cheng Xiaonong (程曉農) uses an analogy to explain Beijing’s sleight of hand with numbers.

“Let’s say last year I had twenty chickens, eight of them large ones, the remaining twelve small-sized. This year I announce my chickens have increased by 25%. How many chickens do I have now? Sounds like simple arithmetic any eight-year old can do, right?”

Cheng says if he adopts China’s National Bureau of Statistics’ method of computation, he will be able to report on a gain of 25% despite being left with only twelve chickens this year.

“Twelve should have meant a decrease of 40%. Where did the 25% in growth come from?”

“Say, small chickens have a higher chance of dying; I therefore decide at the outset to only calculate the large ones. Another yardstick: I’ll only count the live ones. So, let’s say last year, a bout of bird flu struck and wiped out two of my large chickens, six of my small ones. Since I only count chickens that are alive, the eight dead ones won’t figure in this year’s numbers. Let’s add another scenario: over the past year, four of my small chickens have grown large. So, I now have a total of ten chickens (the six large ones that survived the bird flu, plus the four now-adult ones). This is how I can arrive at my 25% on-year growth figure. I’m not kidding. If you read the footnotes of the National Bureau of Statistics’ reports closely, this is what they mean in reality.”

To see whether Cheng’s claims hold water, I looked at the CCP’s report on China’s industrial production. The latest one says China’s industrial output in March rose by 14.1% compared to a year ago. One of the report’s footnotes states that the report is only concerned with companies with an annual revenue of at least $20 million - these would be the “large chickens” in Cheng’s parlance. The footnote goes on to admit because some enterprises only reached the $20 million benchmark this year, and because some of the firms that had previously brought in $20 million worth of business failed to do so in the latest round of data-collecting, this year’s and last year’s basis for calculation are different.

So, Cheng’s description of CCP’s style of massaging numbers does stand up to scrutiny. We can also see why China’s industrial growth data can still be strong despite clear signs of manufacturing decline.

“Footnote reading” is also important for foreign companies seeking to gain a foothold in the China market, as the US mutual fund giant Vanguard learned to its cost. Initially it had grand plans for China; three years ago, its head of international business Jim Norris declared “We’re in this for a hundred years, not five years.” Then, in early 2020, Beijing began to allow foreign asset management companies to sell wholly-owned mutual funds in China. All seemed to bode well for Vanguard.

Yet last month, the company abruptly dropped its application for a fund license. The reason? After Beijing gave foreign funds the green light to operate independently, it toughened their liquidity requirement, making fund-launching more costly, according to Bloomberg. A measure of the onerousness of this new demand: it has been a year since global fund players can go at it alone, yet only BlackRock has won a license.

“It’s easy to make a (license) application, but committing all the resources to make things work is much more difficult,” Bloomberg quoted an analyst as saying.

When I was working in mainland - this was before digital wallets became commonplace - every time I handed over money to purchase something, the person behind the cashier would hold my banknotes mid-air and smack her fingers against them to make sure they weren’t counterfeit. Each time I saw this gesture, I was reminded afresh that in mainland, things may not be what they seem. Each time we see an impressive-sounding headline coming out of China, we should “smack our fingers” against it too.

(Michelle Ng (吳若琦) is an independent bilingual writer based in Hong Kong. Her blog is, and she can be reached at

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