Looks like the government's of both countries believe the people (as Jack would say) "can't handle the truth". Obviously the citizens are not that dumb, and realize something is amiss. Wall Street? Happy to accept virtual reality as long as it's "better than expected" and gives us "green shoots"... don't let facts on the ground get in the way of a good story.
Specific to China, I have said many times only buffoons believe "Goldilocks" i.e. 10% growth with 3% inflation. According to the think tank, China is understating inflation by about 7%... which would give you 10% growth at 11% inflation. Now that I can believe. But speaking to the previous paragraph it makes it all laughable than we are reacting to the "official 4%+ inflation" reported overnight!
- With price pressures on the rise in China, a rare public spat has broken out in government circles about whether the statistics agency is suppressing the full truth of how high inflation really is. Many Chinese have long harboured suspicions about the quality of official inflation data, saying that it does not adequately capture soaring property prices or food costs.
- But criticism took a curious turn this week when the Chinese Academy of Social Sciences, a top government think-tank in Beijing, published a research article arguing that the consumer price index had been under-stated by more than 7 percent over the past five years.
- The National Bureau of Statistics, which regularly defends the quality of its output, swung into action. "Obviously, the article's conclusion does not hold any water," Sheng Laiyun, NBS spokesman, told reporters. (obviously!)
- The think-tank report found a gap between historical inflation figures and those that can be calculated based on the supposed weights assigned to the various components of the consumer price basket. The inference was that the NBS might have been massaging reported data by changing weightings without informing the public. (that's one way to do it but very crude... just wait until you get into "substitution" and "hedonic adjustments" - then you've graduated to American style obfuscation)
- "While only publishing the sub-indices of eight categories but not releasing changes in basket weightings, there is an opportunity to adjust the CPI figure," wrote Xu Qiyuan, author of the report.
- Xu, for his part, was careful to clarify that his report was based on his personal views and in no way represented the Chinese Academy of Social Sciences. (somehow I think we might never hear from Xu again...)