China Hints that it Manipulates CPI

A reasonably readable piece in NY Times; but what I want to direct attention to is: Quote: In recent weeks, Mr. Xi has promised to clean up Beijing’s noxious smog and make it easier to hail a cab on the city’s congested streets. This apparently innocent remark about China might have more than meets the eye.

Patrick Chovanec is an American economist living in China and has this very good homepage – though the reader should consider it is written under surveillance of the Chinese authorities:

Chovanec has pointed out that the weights of the Chinese consumer price index are published nowhere, but apparently the taxi-fares are included in the sampling process. Taxi-fares are being thoroughly controlled and not allowed to rise. The effect has naturally been that nobody wants to drive cabs with a resultant shortage of cabs.

It is unlikely that a Chinese head of government make slips of tongue, so the leadership thus indirectly admitting that the official CPI is manipulated and is underestimating real price rises.

As with anything the reader wanting to get a fair picture should always use discretion as the image official statements want to project is not always the whole truth.

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