China: Worries of fake data/ Reports of empty factories in China that are running their engines to make it look like they’re operating.

by JealousEntrepreneur

There are reports that empty factories are running their engines to make it look like they’re operating again. Here some interesting excerpts from the article:

(Bloomberg) — The pressure to get China back to work after the coronavirus shutdown is resurrecting an old temptation: doctoring data so it shows senior officials what they want to see.

This phenomenon is playing out in Zhejiang province, an industrial hub on the east coast, in the form of electricity usage. At least three cities there have given local factories targets to hit for power consumption because they’re using the data to show a resurgence in production, according to people familiar with the matter. That’s prompted some businesses to run machinery even as their plants remain empty, the people said.

On Saturday, a newspaper in one of Zhejiang’s cities appeared to take aim at the practice. The Taizhou Daily published a front-page commentary criticizing local officials for narrowly focusing on power usage, arguing that hitting the targets won’t ensure economic growth. By Sunday, a link to the article on the paper’s website was no longer working.

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While it’s unclear how wide the problem of doctored data is in China, there are signs that electricity usage has become a focus for more than Zhejiang. The official Xinhua News Agency last week published a story about production resuming in Guangdong, China’s largest provincial economy, using power consumption as the main evidence to show how quickly things were getting back to normal.

The use of electricity demand as a metric risks falling into the trap described by Goodhart’s Law, which says that economic indicators become unreliable when they become the focus of policy makers’ actions.

In Zhejiang, one factory owner said they were told verbally by officials on Feb. 26 that they had to reach 20% of their usual consumption, a level the plant was capable of achieving. But some smaller companies are unable to restart work because workers haven’t returned and have resorted to turning on all their electric equipment, even air conditioners, to meet the quotas, according to two factory bosses.

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If economic activity doesn’t return to normal soon across the nation, it may spell the end for many firms. A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months.

Source: finance.yahoo.com/news/china-push-jump-start-economy-210000691.html

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