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China Data Suspected Says 75-Year-Old Theory: Cutting Research

A mathematical tool devised by an American physicist in the 1930s underscores doubts about the quality and reliability of Chinese economic data, according to research by Australia & New Zealand Banking Group Ltd.

The results are based on “Benford’s Law,” which holds that in any series of numbers, certain patterns will be found only if the statistics are naturally generated. The rule, created by former General Electric Co. engineer Frank Benford, suggests patterns for the first and second digits in a numeric series and can be used to detect phony data, Li-Gang Liu, ANZ’s chief economist for Greater China, and colleague Louis Lam said in a Jan. 8 report.