Wen Jiabao delivered his annual economic report for China on Saturday and announced this year's growth target at 8%. Last year Wen had a growth target of 7% but the final number was 9.5%, and this was believed to be an underestimate and many are sceptical of this year's target. Jake van der Kamp in today's SCMP notes something I've discussed previously: China's economic numbers don't add up. The weighted average of the provinces' GDP far exceeds the national number. The Government announced a revamp of China's statistics law (yes, they have a statistics law, rather than laws of statistics) to correc the problem. Until the revision happens, the incentives remain far stronger for provincial governors to exaggerate and beat the national average. While logic dictates that not everyone can beat the average, this is China and logic doesn't always play a part.

Along the same lines is another Chinese conundrum: why does such a booming economy have such a poorly performing sharemarket? The Standard has some advice today: sell the market short each year when the NPC meets and talk of reform gets hopes up. The Economist (reg. req'd) also addressed reform of China's stock market, seeing hope in the latest measures but not convinced they will work. The main problems remain: poor corporate governance; a huge overhang of Government held stock; fraud and worse. "Decent" companies strive to list in Hong Kong, London or New York, knowing the stricter listing rules and regulatory environment gives investors confidence in the company. Perhaps China is able to finally reform its own stock markets in responding to this competition. But unless other parts of the framework such as rule of law, consistent and independent courts and elimination of graft are part of the reform China's stockmarkets will remain backwaters, even with a huge pool of domestic money waiting in the wings.