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Part 3: Anomalies In The Chinese Covid Data – Evidence Of Manipulation?



  • “Mortality data to calculate actual [Covid] deaths are available in only a subset of countries where reporting systems are functioning effectively.” – A UN Report

China’s economy is slowing down. There are many causes, including stress in the property development and real estate markets, and Beijing’s crackdown on Chinese Tech. But lurking underneath is a large Unknown: How, and when, will China emerge – really, finally – from its Covid crisis? 

Initially, many expressed optimism that China had beaten the virus and would gain ground on Western economies still struggling to contain it. Even the Wall Street Journal thought so.

  • “China’s Economy Is Bouncing Back. Success in containing Covid-19 is bringing life back to normal and helping close the economic gap with a rival As much of the world struggles to contain the coronavirus, China’s recovery is gaining momentum, positioning it to further close its gap with the U.S. economy.” – (Aug 24, 2020)

This hasn’t happened. Despite the surge in (mostly mild) Omicron cases, Western economies have done OK-to-Very-Well-(thank-you), and there is a sense that the crisis phase is coming to an end. But in China, things are murky. Entire cities are going back into hard lockdown. Omicron has arrived. There are reports of food shortages. Authorities are closing off mass transit to keep people in place. It isn’t working. “Local outbreaks are springing up one after another”: Xian (13 million people), Tianjin (14 million), Anyang (1.5 million), Zhengzhou (5.5 million), Yuzhou (1.1 million), Guangzhou (15 million).

The pandemic exit-path for China is becoming much harder to assess.

The effects have been felt in the financial markets. Instead of surging ahead, China has fallen behind. 


How bad is it? Or how good is it? Where does China really stand today? Have they truly succeeded – as official statistics claim – in beating the virus? Is “Zero Covid” a mission (almost) accomplished? Or have authorities covered up the problem (for political reasons)? Will China struggle in the coming year to restore a “normal” economy? 

The answer is unclear, because there are big problems with the official Covid data coming out of China.

Four Anomalies Related to China’s Covid count

The credibility of Chinese Covid count is clouded by several anomalies in the official Chinese numbers.  

  • Differences in the reported mortality figures derived from reliable Western, Chinese, and international sources  
  • The sudden and complete disappearance of Chinese covid deaths from official reports after April 1 2020
  • The peculiar Case Fatality Rates in China — the primary measure of the virulence of the disease 
  • The anomalous overall death statistics in China in 2020 and 2021 

1. Multiple Figures for the Actual Death Count

There are a number of authoritative sources for statistics on Covid deaths in China. Western sources include Reuters, Johns Hopkins University, The New York Times, Bloomberg and The Economist. In China, the key sources are the National Health Commission of the People’s Republic of China (NHC, with data in Chinese), and the Chinese Center for Disease Control (CCDC, in English). The World Health Organization – WHO – and the UN also publish Covid data.

These sources do not agree on the same number for the Chinese mortality count.  

Most give a figure of 4636 Covid deaths in China since Jan 1, 2020.

Johns Hopkins, the UN, and WHO give higher numbers. 

[Slight as the differences are, they are cited by some critics of my earlier columns as an indication of (I suppose) my carelessness.]

Fortunately, this anomaly can be easily explained. 

The first six sources include only deaths reported in mainland China. The Johns Hopkins number also includes 213 additional deaths reported in Hong Kong. (China of course now claims Hong Kong as part of its integral territory.)

The WHO number includes both Hong Kong’s count and another 850 deaths that occurred in Taiwan, which China also claims. (WHO defers to Chinese sensibilities on this point. It is surprising that the Chinese sources — the NHC and the CCDC – do not include either Hong Kong or Taiwan .)

The numbers add up. All sources agree on the 4636 figure for mainland China. This mystery can be put to rest. 

However, it raises a much more significant and problematic anomaly. 

2. China Stopped Counting Covid Deaths in April 2020

The 4636 count provided by the NHC and the CCDC, and adopted by all of the Western sources derives solely and entirely from the 1st quarter of 2020 — almost two years ago. Since that time, mainland China has reported zero Covid deaths. 

This is not because Covid has been eliminated. 

China has in fact continued to report thousands of new cases of Covid. From April 1, 2020 until January 8, 2022, China officially counted 34,107 new Covid infections (Johns Hopkins data). Of those cases, 12,005 occurred in Hong Kong, which also reported 213 deaths, in line with what one would expect. But not on the mainland. 

Over the last 20 months, China (ex Hong-Kong, ex Taiwan) has reported 22,102 cases, without a single death attributed to the disease. 

If the original 5.7% fatality rate that China experienced in early 2020 had continued, we would have seen another 1200 deaths since that time. If the rate had dropped in line with the Hong Kong rate, there would have been 350 additional deaths. 

The numbers may seem small, but there is a huge problem here.

Zero deaths, while the virus continued to spread, with thousands of new cases emerging, as acknowledged by the Chinese authorities – is implausible, medically and statistically. The abrupt transition from a raging epidemic (Wuhan/Hubei in Q 1 2020) – with fatality rates several times higher than those seen anywhere else over the past two years – to a complete cessation of Covid mortality after April 2020 – is impossible. Tens of thousands of Chinese were and are still becoming infected by the virus. No vaccine or treatment was available until well into 2021, and China was slow to roll out its vaccination programs even then. (As of February 2021, China had managed to produce and distribute vaccine sufficient for just 2% of its population. Even as of December 2021, the vaccination rates among vulnerable elderly Chinese had reached only 30-40%.)

Pro-Chinese enthusiasts may make a quasi-reasonable case for the effectiveness of China’s extreme public health countermeasures in slowing the spread of the disease. But – this cannot account for the absence of mortality outcomes in people who do contract Covid. Once a person is infected, lockdowns and masks have no further effects on the medical prognosis.

So how to account for this anomaly? The most likely explanation – really the only one that can explain this claim of perfect success in the midst of a chaotic public health crisis – the only explanation is the political explanation: Beijing ordered the mortality number to become 0.0%. And so it came to pass. Medical and local officials fell in line, and Zero Covid was declared and achieved on paper, irrespective of reality.  

Experts in Chinese politics (which I am not) can debate the motives and mechanics of this campaign of deception. I just look at the numbers – official Chinese government numbers – and they scream manipulation. 

3. China’s Covid CFR is Too High

And here a new anomaly emerges. 

China’s “case fatality rate” or CFR for Covid is too high

What does this mean, and what does it imply?

CFR is a fairly simple concept, but to be clear: 

  • “In epidemiology, the case fatality rate (CFR) is the proportion of people diagnosed with a certain disease, who end up dying of it, generally expressed as a percentage. It represents a measure of disease lethality. The mortality rate – often confused with the CFR – is a measure of the relative number of deaths within the entire population. A CFR, in contrast, is the number of deaths among the number of diagnosed cases only, regardless of total population.” – Wikipedia 

The overall CFR rate for China, from Jan 2020 until today, is far higher than for any other country.  

The anomaly is more striking for the original outbreak in Wuhan. In the first quarter of 2020, 7.7% of all Covid infections resulted in death. 

Two explanations are possible. 

  • Covid was somehow much more virulent in Wuhan/Hubei in the first 90 days of the official epidemic, killing its victims at an appalling rate – before suddenly becoming almost benign (causing no further deaths at least, in Wuhan, or anywhere else in China); or
  • The metric is faulty, because the denominator – the number of cases – is far too small. 

If cases are underreported, then deaths would also have been underreported – since a Covid death must be attributed to a Covid case. There can be a Covid case without a death, but not a Covid death without a case. Too few reported cases = too few deaths attributed to Covid. 

4. Excess Mortality – China’s Crude Death Rates Are Higher Than “Normal”

It is obvious that Covid has killed many people in the past couple years who probably would not have died otherwise. It is also obvious that government record-keeping is not perfect, and for many reasons the official count of Covid deaths may not be completely accurate. There has almost certainly been some level of “excess mortality” – Covid deaths which were not counted as such. The amount of excess mortality likely varies from country to country. It is an important “missing factor” in our understanding of the pandemic. Without it, we cannot fully assess the effectiveness of our countermeasures and alternative public health policies. 

Reliable, nonpolitical institutions recognize the concept of excess mortality and are making efforts to estimate it. The World Health Organization calculates what it calls “the true death toll of Covid-19” and arrives at a figure of 1.3 million global excess deaths for 2020. The U.S. Center for Disease Control (CDCtracks it. The UN describes excess mortality as its “preferred measure.” Excess mortality data bases are maintained and updated by The New York Times, The Financial Times, The Washington Post, and Eurostat. The Economist’s model in particular has attracted much attention (addressed in my previous column).

Here is how the UN describes the concept.

  • “Reported death numbers under-estimate the number of lives lost due to the pandemic. They miss those who died without testing, and they are contingent on the country correctly defining COVID as the cause-of-death…. Excess mortality is defined as the difference between the total number of deaths observed for a specific place and given time period and the number that would have been expected in the absence of the pandemic (no-COVID-19 scenario). This difference is assumed to include deaths attributable directly to COVID-19 as well as deaths due indirectly to the disease through impacts on health systems and society…”

The idea of excess mortality should be noncontroversial. With good records, estimating it is straightforward. Here, for example, is the American CDC’s chart of excess deaths for the U.S.

It would be nice if we had similar data from China, where the virus originated. Beijing refuses to provide it.

Nevertheless, the World Bank and the United Nations do provide data on crude death rates for almost all countries, including China.

In 2019, China’s increase in the crude death rate (deaths per 1000 population) took a huge jump above the previous trend line (according to UN data). The anomalous increases continued in 2020 and 2021. 

The sudden acceleration in the rate of increase of the crude death rate is reflected in a growing gap between the trend line for overall mortality and the actual reported mortality statistics. By 2021 there were cumulatively about 950,000 deaths “above the trend line.”  

Whether these extra deaths can be attributed to Covid or not… well, that is where the discussion enters the higher realms of statistics, machine learning models, and (informed) speculation. 

But clearly something must have happened, something out of the ordinary. It could be that there is some other public health catastrophe taking place that has killed nearly a million too many Chinese in the last couple of years. I won’t speculate on that. But it is a fact – without any speculative element whatsoever – that the overall UN-reported crude death rate in China jumped significantly in 2019, and by 2021 was almost 5% higher than the 2009-2018 trend line.

(It is also interesting that the UN Data source carries a strange caveat: “NOTE: All 2020 and later data are UN projections and DO NOT include any impacts of the COVID-19 virus.” This is odd, since if they aren’t counting Covid, it is not clear how they could provide a Covid-free number. My guess is that this statement is a political sop.) 

In any case, it remains an anomaly – calling for some sort of explanation.

In Summary: Making the Number 

The most charitable interpretation of all this would be that China falls into the UN’s other “subset of countries where reporting systems are not functioning effectively.” Mere sloppiness. But how likely is that? 

The more probable interpretation –- unfortunately – is that there has been a systematic campaign of data suppression and falsification, to sustain the Zero Covid claim which China’s leadership has embraced. 

There is a history in China of this sort of mindset – setting a target, and forcing the “facts” to fit the target number. It is familiar to anyone who takes on the challenge of interpreting Chinese economic data. In 2010, a prominent American investor made this point about Chinese economic statistics:

  • “In the West our economic growth is a result of decisions that you make and I make and that the market reflects via pricing, and at the end of the day we calculate all activity, and that’s our economic growth. In China it starts with, “We are going to grow 9% next year. Now, how do we get there?” It’s the start of the equation and the activity is the residual. And that’s philosophically the problem. In China it’s all about making the number. People are rewarded at almost every level of government of making their numbers…. You don’t want to lose face, and it’s all-important to your advancement in the Communist Party and your local party to make that number.”

“Zero Covid” may well be a valid public health objective (although we in the West now tend to think differently, in terms of something more like “making Covid livable”). But in the Chinese context, once Zero was declared as the target, it mobilized the bureaucracies — medical, governmental, military – to “make the number,” and in the Beijing way, the shortest short cut to achieve that number is to fudge the data. Beijing wants Zero? We’ll give them Zero. 

(But it doesn’t mean the cost will be Zero.)


Teacher, Police And Firefighter Pensions Are Being Secretly Looted By Wall Street



America’s severely underfunded public pensions are allocating ever-greater assets to the highest cost, highest risk, most secretive investments ever devised by Wall Street, such private equity, hedge funds, real estate, and commodities—all in a desperate search for higher net returns that, not surprisingly (given the outlandish fees and risks), fail to materialize. Transparency—public scrutiny and accountability—has been abandoned, as pensions agree to Wall Street secrecy schemes that eviscerate public records laws.

Our nation’s state and federal securities laws are premised upon full disclosure of all material risks and fees to investors: “Read the prospectus before you invest,” is the oft-cited warning by securities regulators. Nevertheless, teachers, police, firefighters and other government workers today are not allowed to see how their retirement savings are managed or, more likely, mismanaged by Wall Street.

For nearly a decade, the United States Securities and Exchange Commision has warned investors that malfeasance and bogus fees are commonplace in so-called “alternative” investments and, more recently, Chairman Gary Gensler has called for greater transparency to increase competition and lower fees.

Gensler has asked the agency’s staff to consider recommendations on ways to bring greater transparency to fee arrangements in private markets. “More competition and transparency could potentially bring greater efficiencies to this important part of the capital markets,” he said. “This could help lower the cost of capital for businesses raising money. This could raise the returns for the pensions and endowments behind the limited partner investors. This ultimately could help workers preparing for retirement and families paying for their college educations.”

Gensler has stated he would like to see a reduction in the fees these investments charge and has also commented on industry abuses such as ”side letters” which permit private funds to secretly give preferences to certain investors—preferences which harm public pensions.


But that’s not good enough to protect public pension stakeholders.

No one—including the pensions themselves—seems to care that the government workers whose retirement security is at risk are being kept in the dark.

The SEC needs to do more—actually alert public pensioners as to those abuses the Commission knows full well are rampant, at a minumum. Advise them, Chairman Gensler, to demand to see and read prospectuses and other offering documents related to their hard-earned savings.

Does the SEC think it’s kosher for Wall Street to conspire with public pension officials to withhold this information from investors—any investors?

Since my 2013 forensic investigation of the Rhode Island state pension exposing gross mismanagement by then General Treasurer Gina Raimondo which I accurately predicted would cost workers dearly; my 2014 North Carolina state pension investigation exposing that $30 billion in assets had been moved into secretive, offshore accounts and, most recently, my investigation of the State Teachers Retirement System of Ohio, I have provided my expert findings to the SEC staff for their review. Each and every public pension forensic investigation I have undertaken has extensively discussed Wall Street secrecy schemes that enable looting. In my book, How To Steal A Lot Money—Legally, I quote disclosures from SEC filings that detail industry abuses.

Join me, Chairman Gensler, in giving government workers a clue, a glimpse, a peek, at the alternative investment abusive industry practices that are carefully guarded by Wall Street and being hidden from them.

Teachers, police and firefighters deserve a fighting chance to protect their retirement savings.

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It Is Time To Buy Bonds



US 10-year note prices are likely to rise through August. The monthly histogram below shows that July and August have been the two strongest months for the note price.

Monthly Return- US 10-Year Notes

Blue: Average Percentage Change

Red: Probability of a rise on that day

Green: Expected Return (Product of the first 2)

These numbers are static in the sense that they change little over the years. This is only one cycle, the one-year cycle, whereas there are many cycles operative at any one time. In order to get a reading on such other rhythms, a scan is run to identify other profitable price cycles. The graph below reveals the most valuable cycles that are operative at any one time.

10-Year Note Monthly Cycle


These cycles reinforce the seasonal tendency for notes to rise. Prices have risen in 60% to 65% of the time in these summer months. With the dynamic cycle also in ascent, the probabilities rise to about 65% to over 70%. There are similar and supportive developments in the Japanese and German fixed income markets.

The cycle projection must be confirmed by market activity. The daily graph reveals that price broke through a downtrend line.

10-Year Notes Broke Through Resistance

Here is a helpful sentiment indicator that supports the bullish view. The cover page of this week’s Barron’s points to much higher rates. Applying contrary opinion, this suggests lower rates and higher note and bond prices. The first objective is 123.0.

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Will There Be War Over Taiwan – The Next Spy Thriller



I usually go through a rhythm of reading one or two serious books, followed by a few works of fiction and with summer on the way I wanted to highlight a few of both. In that regard I have just finished Laurence Durrell’s ‘White Eagles in Serbia’, an old-fashioned espionage thriller where the hero Colonel Methuen is dropped behind enemy lines in post war Serbia (he speaks excellent Serbo-Croat) and becomes embroiled in a violent plot to overthrow Tito.

The book is a warm-up to reading Durrell’s ‘The Alexandria Quartet’, a work that nearly won him the Nobel Prize. Durrell was part of an interesting Anglo-Irish family, who largely considered themselves Indian – his brother Gerald, the naturalist and writer, touches on this in ‘My Family and Other Animals’.


Though I am not an expert on these matters, I found ‘White Eagles’ a more realistic account of espionage than much of what we see in the media today (Mick Herron’s ‘Slow Horses’ is good), and overall it is a tale of derring-do that is more in keeping with the work of the founding fathers of the genre – Eric Ambler, John Buchan, Erskine Childers and Ted Allebury for example.

It also made opportune reading given what seems to be an epidemic of espionage – with reports of the Chinese hacking group APT40 using graduates to infiltrate Western corporates and notably the admission by the head of Switzerland’s intelligence that Russian espionage is rife in that country (notably in Geneva – for which readers should consult Somerset Maugham’s ‘Ashenden’ as background material).

These and other trends – such as the outbreak of a heavy cyber battle last week (against Lithuania and Norway for instance) and the increasingly public ‘clandestine’ war between Israel and Iran (they have just sacked their spy chief) point to a world that is ever more contested and complex.


Secret World

One of the new trends in the space is cyber espionage – both in the sense of stealing state and industrial/corporate secrets, influencing actors (such as the manipulation of the 2016 US Presidential election) and outright acts of hostility such as the hacking of public databases and utilities (i.e. healthcare systems). Here, if readers are looking for some serious literature I can recommend two excellent books – Nicole Perlroth’s ‘This is how they tell me the world ends’ and ‘Secret World’ by Christopher Andrew.

I am personally more intrigued by the difference between a spy and a strategist. A spy’s work could well be described as the pursuit of information about someone who is acting with a specific intent, as well as a sense of their reaction function. There are plenty of examples – from Christine Joncourt (‘La Putain de la Republique’) to Richard Sorge (see Owen Matthews’ ‘An Impeccable Spy’).

In contrast a strategist may try to plot trends and the opportunities, spillovers and damage they may cause. The US National Intelligence department is good in this regard, becoming the first major intelligence agency to publish detailed warnings on the side effects of climate damage.

Spies and strategists might work together, but history is full of examples (LC Moyzisch’s ‘Operation Cicero’) where intelligence fails to make it through the strategic process or is simply ignored for political reasons (might the early warnings on the invasion of Ukraine be an example).

Asia next?

In the spirit of the Durrells and Flemings of the world, what issues might be of interest in terms of digging into unknown knowns and unknown unknowns. Here are a few ideas, most of which are Asia focused (we might see an uptick in Asia focused thrillers).

On the diplomatic front, an interesting recent development was the visit of Indonesian president Joko Widodo to Ukraine, and then Moscow. It was a rare visit to Ukraine by an Asian leader and potentially marks the emergence or at least aspiration of Indonesia (population 273 million) as an emerging world diplomatic player. What has intrigued me so far is that there has been little coordination by the populous emerging (largely Muslim) nations (Nigeria, Indonesia, Pakistan) in the face of high energy and food prices, and that potentially Widodo could play a unifying role here.

Then, still in Asia, but on a more deadly footing, if the Western commentariat is to be believed, China is preparing an assault on Taiwan, and looking to learn from Russia’s military errors in this regard. Other countries are reacting, and I suspect that there will be much intrigue around Taiwan’s ability to acquire sufficiently powerful ballistic missiles that could strike the coastal cities of China, and relatedly how long might it take Japan to produce nuclear missiles (my sources say they could very ambitiously do it in five months!).

So, whilst the espionage literature of the 20th century has tended to be focused on Geneva, Berlin and London in the 21st century we may find ourselves reading about ‘behind the lines’ exploits in Jakarta and Tanegashima.

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