At this point, Wall Street’s just playing along with China.

“You can’t trust the numbers,” Bill Miller, CEO of LMM Investments told a room full of investors at CNBC’s Delivering Alpha Conference this week.

Miller spoke on Wednesday, just hours after China announced that it once again hit its GDP growth target of 7%.

This, despite the fact that its economy seems to be experiencing a major slow down.

But after 25 years of watching China hit the mythical 7% mark without fail, analysts understand the charade.

There are dead giveaways everywhere. The most obvious way to tell that China’s books are cooked, though, is by looking at how its neighbours are faring.

Singapore swing

“Singapore’s GDP declined 4.6% last quarter. Singapore’s numbers you can trust,” Miller said. “That’s a good sense of how much the Chinese economy has slowed down.”

Singapore’s GDP was dragged down by a huge slow down in manufacturing — down 14% in the second quarter of this year. And this swoon was caused mostly by a lack of demand from its neighbour, China.

China is trying to take its economy through a painful transition from an economy based on foreign investment to one based on domestic consumption.

After years of explosive growth, wages are finally increasing in China, making it less attractive to manufacturers and other investors. But even with this uptick in wages, not enough people in China have the purchasing power to grow the economy on their own.

Until they do, the country’s in a jam.

The best laid plans

China’s president Xi Jinping is calling this awkward period the “new normal,” and has vowed to make Chinese companies more transparent so they can compete with their counterparts in developed nations. Xi has also vowed to reform the country’s bubbly housing market, which has depended on easy government money to explode.

This transition is really not going as planned, however. The economy has slowed down faster than it seems even Chinese authorities even imagined.

Another place you can see the impact of China’s economic slowdown is Australia’s export data.

Bank of America expects net export growth in Australia to fall from 1.7% to 1.4% in 2015. For 2016 it forecasts that the slowdown to continue, dragging net exports down 0.9%.

What reform agenda?

Consider all of this when China reports its final growth figure for 2015 (likely 7%, right on target).

Also consider the fact that the country’s major stock indices got hammered through June and July, falling around 30% before the government decided to pull out every measure possible — banning the sale of stocks for 6 months, going after short sellers, throwing cash at the market — to stop its death drop.

It had no other choice. The government has encouraged Chinese citizens to jump into the stock market for the last year. Until things went south on June 12th, this had been a major factor behind the Shanghai Composite’s 150% surge.

But as China’s stock market declines, a broad economic slowdown should be showing up in the numbers, Bloomberg economist Tom Orlik argued in a recent note.

“Growth in financial sector value added came in at 17.4 per cent year on year in the first half, up from 15.9 per cent in the first quarter. That is more than double the growth rate of the economy as a whole,” he wrote in a recent note.

That offset a slow down in other key sectors for the Chinese economy, like real estate.

Plus, if the financial sector hadn’t grown so fast — instead of staying stable at the 10.2% growth rate it had before the government told everyone to get into the stock market — China’s GDP would have been down 0.5% according to Bloomberg’s calculations.

However.

“The bad news is that, with the increase in financial sector output tied to surging equity market valuations and turnover, it will be tough to sustain in the face of the market correction,” Orlik wrote.

Moreover, if the country wants to tout its reform agenda, saving the market from a correction is no way to do it.

Investors are seeing that the Chinese stock market’s rules are made up by the government to suit its purposes. And the government has no choice but to play that way because the financial sector and its stock market money machine are keeping GDP “on target.”

The day China reported its 7% GDP number, the Shanghai Composite fell 3%.

People aren’t buying this stuff anymore.

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