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They have got so accustomed to the Western media’s tendency to exaggerate Chinese achievements that any journalist who steps out of line is immediately punished. When CNN commentator Jack Cafferty called the Chinese “goons” and their products "junk" on a political program in April last year, China’s Foreign Ministry was quick to brand it as an “evil attack on the Chinese people,” and demanded an apology from both CNN and Cafferty.

But China also feeds the Western media with misleading reports, like exaggerated export figures. For example, when world economies are contracting by as much as 3.5-4 percent now, China is busy publishing antiquated export reports of 8-9 percent growth. One does not have to be a rocket scientist to figure out that an export-oriented country with slumping demand for its goods abroad cannot grow at those levels. But that is what the Chinese say and that is what the faithful Western media report.

First, let us compliment the Chinese for their achievements in the last 20 years.

1. They dumped “communist economics” and embraced capitalism and in the process received US$700 billion in foreign direct investment.

2. China has about US$2 trillion in cash reserves in foreign banks. Although the money cannot be easily withdrawn, it is still a phenomenal amount of cash.

3. Gross domestic product growth figures are a great achievement. There is a caveat – when you export 60 percent of your goods and services, the high GDP growth data is worthless.

4. If one believed in China’s exaggerated statistics, which inspire Western economists’ calculations, then another achievement is noteworthy – the reduction in the poverty rate to a negligible 2 percent. Then again, the data seems doctored so that the political commissars look good.

5. China’s new industrial and commercial infrastructure is definitely commendable. But again, it is built for the benefit of those 300 million who live on the eastern seaboard.

Despite promoting a great Chinese public image in the West, its leaders are hiding a lot. Their economics statisticians never tire of publishing faulty and fairy-tale data. Since these are state secrets no one can ever challenge them.

The Chinese are masters at hiding famines and bad crops, including the long famine in the 1960s. They also hid the recession in 2002-03 and are hiding their current economic outlook with falsified statistics.

The West stopped the bad publicity about China soon after former U.S. President Richard Nixon shook hands with the former leader of China, Chairman Mao Zedong, in 1973. Aid offered in lieu of picking up a fight with the Soviet Union during former U.S. President Ronald Reagan’s era tempted them a lot.

In 1994, China’s currency stabilization reform firmly linked the Chinese currency with the U.S. dollar, and thereafter the West began heaping praise on everything Chinese. Soon the sweat and toil of the Chinese people showed up as cheap imports in the West. Later, as the Chinese began to deposit their export earnings in Western banks, it completely silenced any objective analysis of China.

For tourists visiting their country, the Chinese built spotless hotels and cities while the countryside remained relatively unchanged. Tourists are often skirted away from bad spots by political commissars masquerading as tour guides and rarely does an outsider get a glimpse of the impact of acid rain, polluted rivers or dying streams and lakes.

What is gravely wrong with China’s current economic model?

Take for example the Chinese banking system and loans advanced to friends, relatives and cronies. Over the past eight years the banking system has advanced as much as US$700 billion in loans to clients that never deserved them. These loans are irrecoverable now and have turned into bad debts. Does this look familiar to a Western observer?

It is another form of subprime loan crisis, except that the loans have been advanced to friends in businesses. As any drastic steps could shake the foundations of China’s economy, they have remained as bad debts.

The export sector in official statistics is largely over-stated. Over the past years, for a larger piece of the export market, China discounted prices, resulting in paper-thin profit margins. Any further price discounts demanded by importers or upward revision of its currency would mean the need for the state to subsidize businesses. The cost of that in overall exports of US$1.7 trillion a year would be greater than US$500 billion. Alternatively, 50 million people would be unemployed and angry citizens would be ready to dump communism.

Once again, does this look familiar?

It is very similar to the U.S. government pumping money into General Motors and Chrysler. Without government aid GM and Chrysler would close down. As in the United States, in China cash will have to be injected through borrowings and from cash reserves. The alternative is social unrest.

China’s prosperous eastern seaboard needs more money to stay afloat today while 800 million people in the internal hinterland are demanding a bigger share of the export bonanza, which has so far eluded them. Regional friction is brewing and could lead to bigger social problems. Add the pollution caused by smokestack industries in the eastern seaboard and a rebellion is in the making.

Let us examine China’s export subsidies more closely. These are well hidden and never discussed in public. But together with the low currency value and cheap labor, they are the engine of China’s stellar export performance.

That subsidies should be eliminated over a short period of time as per the World Trade Organization charter was accepted by China when it became a WTO member in 2001. How can China eliminate the US$200 to $300 billion in export subsidies without bankrupting businesses that receive them? Answer: rename them as development incentives for high-tech industries and avoid the WTO scanner.

Chinese infractions are innumerable in the international political, diplomatic and strategic fields, where a well-hidden political agenda is the basis of their economic and strategic aid.

China provided Pakistan with nuclear technology to build a bomb. Now there is a real danger that these nuclear arms could fall into the hands of the Taliban. Recent published reports confirm that China’s own nuclear tests in the last 50 years could have killed at least 190,000 people, mostly due to nuclear radiation over a period of time. But the Chinese do not wish to discuss this. They prefer to talk about Japanese Prime Minister Taro Aso’s gift of a potted tree to the Yasukuni Shrine where Japan honors its war dead.

Have the Chinese ever told anyone that their population is more than 1.5 billion as opposed to the 1.3 billion they keep telling the world? They want to be complemented for their one-child policy. As a matter of fact, their population could be much higher by 300 million people. All the economic statistics would hit the dust if the true extent of its population growth was known.

Strange are the ways of Chinese leaders in maintaining secrecy. They want to hide too much. They succeed in doing so through the good offices of their American friends, dependent upon their cash reserves and cheap exports. If the United States or any other Asian country tried to hide anything similar to what China is doing, the Western media and diplomats would work overtime to unearth it. China is the only exception.

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(Hari Sud is a retired vice president of C-I-L Inc., a former investment strategies analyst and international relations manager. A graduate of Punjab University and the University of Missouri, he has lived in Canada for the past 34 years. ©Copyright Hari Sud.)