China’s Dodgy Data Is Under Scrutiny Again, With Latest GDP Release

As China released gross domestic product and other economic statistics earlier this week, a perennial question has once again been raised: To what degree can the numbers be trusted?

Or as the Xinhua News Agency put it on Jan. 23: “One plus one equals two. But it’s not always the case, especially when you are talking about the calculating of local and national gross domestic product GDP data in China.”

What raised eyebrows was that the national GDP number came in below the figure one gets from totaling all the provinces’ GDPs. That presents, as Xinhua said in its unusually acerbic piece, “a somewhat peculiar math problem.”

While China’s official GDP in 2013 amounted to 56.9 trillion yuan ($9.4 trillion, up 7.7 percent from the previous year), the aggregate of all the provincial figures was about 2 trillion yuan more. And that’s not including three provinces (of 31 regions reporting), which have yet to publish their GDP numbers, according to Xinhua.

While this has “aroused suspicion among Chinese netizens that some growth-obsessed local officials have cooked the books,” (quite likely, Xinhua says later in its piece) there are other reasons for the discrepancy, the article explains.

One important reason: overlapping calculations, particularly when companies have businesses extending across different provinces. “Unlike the calculation of the nations’ GDP, where you have customs to clearly define the attribution of added value, it is very difficult to define which part of added value belongs to which provinces,” explained Cong Liang, an official with China’s state planning agency, who spoke at a press conference in Beijing on Jan. 22 and was quoted in the article.

Xinhua concludes that netizens are right to suspect that part of the problem is the exaggerations of local officials, and one reason for this suspicion is that local figures consistently exceed the national calculations.

“It is possible that the national and local aggregate figures are not in accordance, but that is not reasonable if local figures are higher year after year than the national, and never go in the other direction,” Yang Yongshan, former chief statistician of the Shaanxi Provincial Bureau of Statistics, said in the Xinhua article.

“The data collected and calculated by the NBS was relatively accurate, while some local officials, under the pressure of ‘performance evaluation,’ tend to try to keep up with others by setting higher GDP growth targets,” Yang told Xinhua.

China’s National Bureau of Statistics is trying to solve the problem. Last year it uncovered nine cases of false reporting, punishing 57 statistics staff. And for the ongoing national economic census, the bureau says that it’s trying to better unify the way provincial data are calculated and that it will discipline those who provide fake figures.

“Refusal to register accurate data, leaking of census data by census officials and institutions, and tampering with data will all be dealt with seriously,” warned NBS chief Ma Jiantang on Jan. 1.

Finally, and perhaps most important, China’s top leaders announced after a key meeting in December that from now on local officials’ performance will be evaluated on several criteria, including controlling debt and maintaining a better local environment, rather than just achieving high GDP growth.

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