Emerging Markets

Carson Block: Quality of Chinese data 'unknowable'

China GDP 'printed' for political reasons: Muddy Waters boss

Founder of short-seller Muddy Waters Research, Carson Block, claimed on Tuesday that Chinese economic data lacked credibility following the release of China PMI data, which came in at a 6-month high.

Block is well-known for issuing damning research and short selling Chinese companies mostly listed in the U.S. and Canada. He became a controversial figure after claiming the firms he was shorting were fraudulent.

Read MoreAsia stocks mixed after China PMI data; metal stocks rally

Carson Block, founder and research director at Muddy Waters
David Paul Morris I Bloomberg via Getty Images

The companies, meanwhile, have questioned Muddy Waters' sources. Chinese mobile security software company NQ Mobile, which saw a huge drop in its shares after Block described the firm as a "massive fraud", has said Block's firm does not disclose who its researchers are and what documents they examine.

Block said the China was facing a "massive credit and asset bubble" and questioned the legitimacy and quality of Chinese GDP prints.

Read MoreCome sue me in the US: Carson Block to China's NQ

"I think we have to understand (that) what China is printing on GDP is really for political reasons internally. It is unknowable what the quality of the data really is," Block told CNBC.

Block is the not the first voice in the market to question the credibility of Chinese data.

China's official purchasing manager's index (PMI) for June came in at a six-month high of 51, in line with expectations and up from 50.8 in May.

Global chief economist at Unicredit, Erik Nielsen said the figures were "curious".

Read MoreIs China still growing too fast?

"Why is it that the Chinese are having PMIs around 50 and growth at about 6 or 6.5 percent. It is constructive in every other country for 50 to be above flat," he said.

"It is simply a curious question, if you look through GDP numbers in any other country, you cannot construct any logical explanation for why they have such little volatility in growth in China," he said.

Block argued that a corrupt elite in China controls the banking system. "They control a huge swath of the economy through non-financial state owned enterprises. The core of the economy is subject to this kind of corruption," he said.

Block also questioned the legitimacy of the anti-corruption crackdown launched by President Xi Jinping, adding "things aren't getting any different".

Read MoreChina's economic growth more like 4%: Marc Faber

Author of the Gloom, Boom & Doom Report, Marc Faber has also voiced his concerns about the growth rate of China's economy and said the annual rate was closer to 4 percent than the 7.7 percent recorded for 2013.

"I said to an economist: 'I think China is growing at 4 percent per annum, and he said do you mean minus 4 percent?'," Faber told CNBC in September last year.

"I don't think [China's economic growth] is minus 4 percent, but we do have to adjust a lot of economic statistics for the credit that has been pushed into the system that is not sustainable in the long-run," he added.