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Two stories, one common theme: suspicion of Chinese figures. Beijing has begun an urgent national audit to determine the government's true debt levels. And in Hong Kong, regulators are trying to wind up China Metal Recycling, the target of a short-seller who queried its reported figures. Neither event will surprise China-watchers.
Since fears about fraud in Chinese companies became a hot topic in 2011, investors have moderated their expectations. Back then, Hong Kong-listed Chinese stocks' price-earnings ratios offered a 7 per cent discount to emerging markets in general, now it is almost a third. Some of the China re-rating reflects slowing growth and debt worries, of course, but it is worth noting that analysts are still expecting corporate China's earnings to grow by a tenth this year and next, according to Citi. There will doubtless be some western surprise that Beijing's beancounters do not already have the debt data to hand. But systems develop at different speeds around the world: after all, the U.S. did not even have a central bank until the point at which it became the world's biggest economy. And data suspicion is not the sole preserve of China: it is only five years since disbelief in western banks' reported asset values became a self-fulfilling prophecy.
As to how much debt there is, who knows? The International Monetary Fund last month estimated it as close to 50 per cent of GDP. Other estimates vary widely, which just underlines the timeliness of Beijing's attempt to figure out what it owes. If China wants its numbers and its corporate reporting to be trusted by outsiders, it has to make them more transparent still – and be patient as changing a reputation takes time. So plaudits to Beijing for ordering the audit – assuming outsiders believe whatever numbers are produced. And if they don't, well, investors are no worse off than before.