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China has fabricated its GDP in the past. Which are the real-world repercussions of doing so?

Let me pose an scenario: If China were in a recession (say, -1% for two quarters), but posts 1% for both, which would be the consequences, if the world acted in accord with those figures? Would it impact variables like currency value? Inflation? Interest rates? SHCOMP? Trade surpluses that don't match the published GDP?

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http://fortune.com/2015/12/14/china-fake-economic-data/

It's not a matter of debate. The Chinese government has always known that their GDP figures are made up. That is why they switched to electricity production quotas, which had more undesirable effects like spurring massive production of aluminum smelters.

Chinese GDP statistics are well known to be fake, as are EU debt figures, government accounts in the US and elsewhere, and many other official stats.

http://www.pbs.org/newshour/rundown/accounting-fraud-is-business-as-usual-at-the-pentagon/

Theres also arbitrary tweaks to the data such as the Fed recently counting patents as GDP to justify more inflation.

There are no particular ramifications because everyone does this.

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Let me try to answer to the "debate whether China has fabricated its GDP in the past". The rest of the question is too broad to be answered properly and should be rephrased.

Jia, Kudamatsu, and Seim (2015) use the methodology of Henderson, Storeygard, and Weil (2012) to corroborate the quality of the provincial growth data by checking if it reflects the growth in nighttime lights observed by satellites. Nighttime lights can be seen as an objective measure of living standards, and therefore its correlation with GDP is indicative of the quality of GDP data. They find such a correlation suggesting that real GDP growth, at least to some extent, reflects improvements in some dimensions of living standards captured by nighttime lights.

  • Jia, R., Kudamatsu, M., Seim, D., 2015. Political selection in china: The complementary roles of connections and performance. Journal of the European Economic Association 13 (4), 631–668.
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