A little-known indicator surfaced as China was preparing to attend the first meeting of the Committee on Statistics under the United Nations Economic and Social Commission for Asia and the Pacific, held in Bangkok, Thailand, from February 4-6.

An article in the People’s Daily called into question the final official GDP numbers for 2008 issued by China’s National Bureau of Statistics. Apparently, the 6.8% positive growth released in Q4 2008 did not correlate with the negative growth in China’s power consumption.

Now it seems that China will face a power glut this year, further calling into question its official GDP data.

The China Electricity Council (CEC) on Wednesday said in a report that demand for energy is expected to decline this year – with a possible uptick starting in Q3. The report cites shrinking exports as the culprit.

We’ve already written extensively about China’s record unemployment and factory closures. However, the extent of the problems have rarely become as clear as with the current CEC report on lower power consumption.

The CEC said that power usage grew 5.23% in 2008, or 9.57% lower than a year ago and the slowest in eight years.

The shrinking demand was mainly attributed to the industrial sector. Approximately 3.43 trillion kilowatt-hours of electricity was used by the industry last year, up 3.83% from a year earlier, slower than the overall social power consumption growth rate for the first time.

In 2008, China’s economy has reached its slowest pace in seven years. Beijing reported that the year-on-year growth rate for the fourth quarter slid to 6.8% from 9% in Q3 and grew 9.9% for the first three quarters.

The big question now is: are those numbers reliable?

We’ve been advising investor for months now to avoid China and instead look at emerging economies in South and Southeast Asia. This latest revelation about China’s questionable GDP data underscores our ongoing concern about any near-term recovery in China.

The buck declined despite some upbeat news from the Institute for Supply Management. The ISM said nonmanufacturing sectors of the U.S. economy expanded during April after three months of contraction. Its services index rose to 52.0% from 49.6% in March. That handily beat economists’ projections for a decline to 49.4%.

Analysts believe traders were locking in their gains from last week’s rally, which was based on signals from the Federal Reserve that it is near the end of its interest-rate cuts. The dollar index, which charts the greenback against a basket of currencies, rose 2.5% last week.

Currency strategists at Brown Brothers Harriman are of the opinion that the “pieces of the puzzle we believe will contribute to a U.S. dollar uptrend this year are beginning to fall into place, but more pieces are needed for a more significant U.S. dollar rally.”

But the good feelings were diluted considerably by a report from the Federal Reserve on the credit crunch, which continues.

More than half of the banks surveyed by the Fed said they had tightened commercial and industrial loans, commercial real estate loans, residential mortgages, and home-equity lines of credit. Almost no banks eased credit terms for any type of loan, the Fed said in its quarterly senior loan officer survey.

“The significant tightening of standards for consumer loans is probably the ugliest news of this report,” wrote Harm Bandholz, of UniCredit Markets. “Investment will continue to shrink, while private consumption growth will come to a halt or even turn negative” in the second quarter.