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Hey, maybe there were some rich and influential Chinese people in Davos this year

Ya think?

Pre-Davos, The IKN Weekly chose to feature the following in IKN349, dated January 17th 2016:

China’s GDP is only growing by 2.5% per annum
This is one of those pieces that could be part of the “politics” section above, but in the end I’ve plumped on putting it here. But no matter where it goes, it’s interesting and has the potential to affect a lot of mining issues, so get ready for this message to gain greater traction.

Professor Xavier Sala i Martin (a Catalan last name, for what it’s worth) of Columbia University is no lightweight and he’s about to get a platform on the world stage, being as he is co-author of “The Global Competitiveness Report 2015-2016” published by the World Economic Forum (Davos shindig coming very soon).

He’s been warming up for Davos by touring South America this week and the message he’s offering is a simple one: China isn’t growing its GDP by a 6.5% or 7% rate as per the official figures, it’s more akin to 2.5%

“China data are the type that mathematicians would call “complex numbers”, that’s to say half real and half imaginary” he says, as quoted by the media in Chile, a country that really cares about the China growth number due to its dependence on copper exports and its relatively serious nature on finance and economy. The report on his presentation continues in this way (translated) (26):

According to the economist, there are two measurements that show Chinese GDP growth is less than that announced by Beijing. The first is called the Li Keqiang Index, named in honour of the current Prime Minister. This indicator is the one the government follows in order to make decisions on macroeconomic policy, includes measurements on the movement of containers on trains/through ports etc, electrical consumption and financial credit/debt figures. According to this index the country is growing by 2.5%.

The second measurement is a study that Mr. Sala i Martin made that will appear in the February edition of the Quarterly Journal of Economics (hey coincidence, just in time for Davos). The expert analyzed NASA satellite photographs and measured the quantity of light in each pixel, with each one equivalent to 1km2 on the ground. Each square has 63 different light intensities, which is “perfectly” correlated to GDP. “Today, if you calculate the luminosity that comes from the NASA satellites, China is also growing at 2.5%”, he said.

Post Davos, now that the same bunch of economists have had their say in front of the Very Important People, the Very Important People have said some stern words to other Very Important People who have decided to Do Something and all of a very sudden we now have the NYT on the case:

Inquiry in China Adds to Doubt Over Reliability of Its Economic Data

HONG KONG — The veracity of China’s economic data has been increasingly questioned as the slowing pace of the country’s growth has startled the world. And a new investigation into the official who oversees the numbers is unlikely to inspire confidence.

It's how the sausage is made, folks.