China, it would seem, calculates GDP differently from the other major economies of the world, measuring production rather than consumption, retail shipments rather than retail sales, and fund disbursal rather than actual spending. Just ask any business manager what delicious possibilities such an accounting method brings.
(Update: I and the AEI got this wrong, counting inventory is the "normal" way to calculate GDP, strange though that is. Thanks to Deepak for the correction.)
Also, statistics in China is a cat and mouse game between provincial bureaucrats eager to inflate numbers for their benefit, and a National bureau of statistics that attempts to deflate them. How all this adds up to a correct number we are not told. Even Chinese are loath to believe those numbers these days.
What's real then? The amazing growth of Urban China is real, so is the amazing amount of infrastructure growth. Growth in Manufacturing capacity is real. Then why do the Economic Mandarins have to resort to all this jugglery? Is it just a Socialist economy not yet come to grips with reality-based accounting and statistics, or is there something hidden beneath the surface of the world's fastest growing economy - inventory, bad debt, "creative" balance sheets and negative free cash flows being hidden under low-cost capital?
Shudder. Are we looking at the world's biggest "too-big-to-fail" case in the making? Naah. Too extreme a thought. But so was Lehman. And Enron. But who on earth (literally), could bail these guys out if their bubble ever bursts?
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