Fraud fears cloud economic data in China

When the Chinese Government’s statisticians travelled to the booming southern city of Zhongshan last year to conduct spot checks on its industries, they were alarmed by their findings. According to their books, the town of Henglan had recorded booming industrial output of 8.51 billion yuan ($1.4 billion) from 73 enterprises registered in the national system.

During their inspections, the officials found 19 of those firms had actually stopped production because they had been relocated or dissolved. A further 38 were below the designated size that permits enterprises to be accounted in national data.

The data had been “fabricated by the staff of the local statistics office” to inflate the town’s figures, the official Global Times reported.

The actual industrial output amounted to 2.22 billion yuan ($367 million), one-fourth the stated data. The Zhongshan case has, this year, intensified long-held concerns among many economists about the accuracy of China’s annual economic figures.

“Figures provided by the grassroots level is very important for accuracy of national statistics figures,” admitted Ma Jiantang, the head of the National Bureau of Statistics (NBS), when he was asked about the Zhongshan case as he released annual economic data on Monday.

To tackle such cases, he said the government had expanded a system of direct online reporting by enterprises, with 900,000 firms now in the national system directly providing “primitive data” online

. “On that basis we will judge whether their reports are true or not,” he said, adding that the NBS would use only “verified data” and cross-reference it with other indicators such as electricity usage, power production, rail and road freight transportation and taxation. “We are intensifying our efforts into investigating cases such as the Zhongshan one,” he added, saying the NBS had even resorted to installing GPS-enabled systems to collect data “to identify enterprises and ensure they are real”.

Doubts about Chinese statistics have been prevalent for decades, although with the opening up of the Chinese economy, economists have in recent years been in a better position to verify numbers by referencing them against other indicators, albeit to a limited extent.

No less than China’s own Premier, Li Keqiang, has expressed doubts about the accuracy of annual statistics.

Mr. Li confided to American diplomats that GDP figures were “man-made” and unreliable, during a candid interaction in 2007 when he was the Party chief in Liaoning province, according to a State Department cable released by Wikileaks.

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Printable version | Aug 17, 2022 9:52:26 pm |