It's a little nuts to divine economic growth by looking at unburnt inventories of excess coal, but that is the Chinese system:
As the Chinese economy continues to sputter, prominent corporate executives in China and Western economists say there is evidence that local and provincial officials are falsifying economic statistics to disguise the true depth of the troubles.
Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said.
Electricity production and consumption have been considered a telltale sign of a wide variety of economic activity. They are widely viewed by foreign investors and even some Chinese officials as the gold standard for measuring what is really happening in the country’s economy, because the gathering and reporting of data in China is not considered as reliable as it is in many countries.
Another measure is excess real estate inventory.
All that being said, I’m seeing some rather striking patterns in the data that tell us two main things:
- The market is not poised to recover, but will continue to see greater downward pressure on prices; and
- Real estate investment is likely to flatten out or start falling, erasing several percentage points of GDP growth.
So if sales were down, and starts were either flat or down, where was the 23.5% investment growth coming from? Developers, burdened by 70% leverage ratios and loans threatening to come due, were rushing to complete whatever projects were already in their pipeline, in order to put those units onto the market and raise cash. Completions (measured in floor space) were up 39.3% in Q1, compared to last year (residential completions were similarly up 40.0%). But, of course, those completed units weren’t selling like last year, so unsold inventories expanded. At the close of Q1, the total amount of floor space “for sale” was up 35.5%, compared to the same date last year, while the floor space of residential units “for sale” grew 47.4%.
Smells like a real estate bubble, and the chart at the end of the article paints an interesting picture. At Forbes, saying that the bubble is deflating implies that one exists. But given the combination of reduced demand, lowering prices, increasing vacancy rates and new completions, I think they're understating the problem, especially since their real estate sector is such a major component of GDP growth.
Speaking of the sketchy reporting of statistics, it isn't limited to just the economy.
FOR those who live in China and are forced to breathe in its air every morning, the findings of a recent report may come as no surprise, but to climate analysts it will make for uncomfortable reading. According to a new paper published in the journal Nature Climate Change, China may be under-reporting its annual carbon emissions by as much as 1.4 billion tonnes a year—roughly the amount that Japan, the world’s fourth-largest emitter of carbon dioxide (CO2), pumps out each year.
China is the world’s largest CO2 emitter and produces around a quarter of global carbon emissions. But according to the new study, which used more than a decade of official Chinese data, China’s carbon emissions could be 20% higher than previously thought. It says the emission discrepancy in 2010 is equivalent to about 5% of the total global output (in 2008).
Funny that the title said "warmed-up" instead of cooked.
While China's CO2 emissions have shown steady growth, ours have fallen.
Back in February I posted about a surprising development: Despite the failure of comprehensive climate and energy legislation in 2010, U.S. carbon pollution emissions and projections of future carbon pollution have been coming down ever since. A new forecast out this week continues that trend.
Lashof outlines some of the reasons for the reduction here. Meade's take is more...uh, acerbic. What this should tell us is that significant progress can be made via conservation and efficiencies (and replacing coal-generated electricity with practically anything else also helps).
UPDATE 1: More signs of economic slowdown in China here.
UPDATE 2: Following up on a previous diary, British Columbia has fine-tuned its carbon tax and it's working quite well.
ON Sunday, the best climate policy in the world got even better: British Columbia’s carbon tax — a tax on the carbon content of all fossil fuels burned in the province — increased from $25 to $30 per metric ton of carbon dioxide, making it more expensive to pollute.
This was good news not only for the environment but for nearly everyone who pays taxes in British Columbia, because the carbon tax is used to reduce taxes for individuals and businesses. Thanks to this tax swap, British Columbia has lowered its corporate income tax rate to 10 percent from 12 percent, a rate that is among the lowest in the Group of 8 wealthy nations. Personal income taxes for people earning less than $119,000 per year are now the lowest in Canada, and there are targeted rebates for low-income and rural households.
Let’s start with the economics. Substituting a carbon tax for some of our current taxes — on payroll, on investment, on businesses and on workers — is a no-brainer. Why tax good things when you can tax bad things, like emissions? The idea has support from economists across the political spectrum, from Arthur B. Laffer and N. Gregory Mankiw on the right to Peter Orszag and Joseph E. Stiglitz on the left. That’s because economists know that a carbon tax swap can reduce the economic drag created by our current tax system and increase long-run growth by nudging the economy away from consumption and borrowing and toward saving and investment.
Of course, carbon taxes also lower carbon emissions. Economic theory suggests that putting a price on pollution reduces emissions more affordably and more effectively than any other measure. This conclusion is supported by empirical evidence from previous market-based policies, like those in the 1990 amendments to the Clean Air Act that targeted sulfur dioxide emissions. British Columbia’s carbon tax is only four years old, but preliminary data show that greenhouse gas emissions are down 4.5 percent even as population and gross domestic product have been growing. Sales of motor gasoline have fallen by 2 percent since 2007, compared with a 5 percent increase for Canada as a whole.
What would a British Columbia-style carbon tax look like in the United States? According to our calculations, a British Columbia-style $30 carbon tax would generate about $145 billion a year in the United States. That could be used to reduce individual and corporate income taxes by 10 percent, and afterward there would still be $35 billion left over.
This is the kind of tax that conservatives should embrace because they're consumption taxes, or use taxes. If your machine doesn't exhale CO2, you're not penalized (h/t Adler).