For some time now I have taken the view that you can trust Chinese statistics, along with Chinese commercial propriety, about as far as you could throw them if they were locked inside a Challenger tank! This is odd because my experience whilst living in Singapore was that Chinese tradesmen and shopkeepers were more honest than any I had come across elsewhere. Perhaps the richer they get the more rotten they become, a syndrome not unknown in the rest of the world! However, in many parts of the rest of the world, there is an old-established system of law that works on the principle that businessmen are crooks in suits and knowledge of that potential threat keeps most of them honest for most of the time.
Anyway, I was fascinated to read an interview with Anthony Bolton at CityWire on the occasion of his retirement from Fidelity China Special Situations investment trust. He was, of course, the darling of the investing classes so when he came out of retirement to start his Chinese venture hopes were high. Alas, the results, I gather have been mixed, hence perhaps, his parting grumpiness, for example:
'When I went out to China I thought corporate governance was about whether the chairman and the chief executive were the same, or whether the board had a majority of independent directors. I found that corporate governance is a euphemism for “are the figures real and is the management lying?,” that is, fraud,’ he said. ‘The Chinese are great liars.’
He gave as an example a company whose initial public offering document stated
that it had 1,000 stores. Bolton found that was far from the truth. ‘It seemed
to have only 500,’ he said.
Yeeeeeees, quite! But if people wish to invest private money into Chinese ventures then good luck to them. What concerns me, however, is the crookery at the top. Mr. Bolton continues with my emphases:
‘If all the big figures are forged, you can work out the real situation, not the official situation,’ he said.
He said that official GDP growth figures were higher than the reality. ‘Growth is not as high as the official statistics say. Inflation is higher than the official statistics say,’ he said.
‘I am more pessimistic on growth than others. It will be difficult to maintain 7.5% [GDP growth],’ he said.
[...]
Bolton emphasised that the Chinese government would protect the four largest Chinese banks, though he expected there would be defaults.
Addressing concerns that debt to GDP in China has spiralled to around 230%, Bolton said that most of this was corporate debt, and that the debt had been investment led rather than consumer led, unlike what happened in the West in the run-up to the 2007-08 credit crunch.
So that's alright, then - not! For some hard-headed, and much more expert opinion, read the comments thread below the CityWire piece. A commenter called 'Prickle' wrote this:
Gosh! Where has he been? I thought everyone over the age of 18 knew that. They
are no worse than the Russians, North Koreans, many Nigerians, lots of Arabs,
and a good number of Brits.
That about sums it up!
