China's growth numbers look like 'Reading the Onion', says famed short seller Muddy Waters

Most countries around the world in 2022 faced headwinds that slowed their respective economies. Whether it's inflation, COVID-19 issues, or supply chain issues caused by the Russian-Ukrainian war, it's been a tough year economically.

Well, apparently for everyone but China.

What happened: Bloomberg reported that in a state television broadcast, Chinese President Xi Jinping said China's GDP exceeded $17.4 trillion. dollars in 2022, which corresponds to a growth rate of more than 4.4%.

For comparison, estimates indicate that US GDP growth will be less than 2% for the year 2022.

China Bear: Muddy Waters, a renowned short-selling research firm, tweeted that reading Bloomberg's report was "like reading the Onion." It's safe to assume that Muddy Waters didn't believe in China's supposed growth rate.

Muddy Waters had long been critical of the numbers coming out of China. In 2011, the firm uncovered accounting problems at Sino-Forest, a company that claimed to be a leader in reforestation in China. Muddy Waters released its report on Sino-Forest and the stock fell 82% and the company eventually filed for bankruptcy.

A few years later, Muddy Waters exposed similar issues at Link Motion Inc (NQ Mobile), another Chinese company. Muddy Waters said Link Motion invented customers. Eventually, Link Motion shares fell over 80% and its CEO was resigned.

China, which recently lifted some of its "zero-COVID" policies, has seen a recent spike in COVID-19 cases, increasing its economic uncertainty. But Chinese stocks have been strong throughout the past month or so after the country eased its COVID-19 restrictions.

Can't argue with yields: Alibaba Group Holding Ltd - ADR BABA is up almost 65% from its October lows. Invesco China Technology's ETF CQQQ is up about 15% in the past month.

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