Is China’s economic data littered with fake figures?
The National Bureau of Statistics appeared to confirm fears expressed by analysts and economists after releasing a draft revision of the Statistics Law earlier this month.
“Those who fabricate data, as well as their superiors, should be held accountable if fudged figures are found in their departments or regions,” Xinhua, the official news agency of the ruling Communist Party government, quoted from a statement issued by the state-run organization.
Concerns have been raised about the validity of a vast range of economic statistics from provincial and municipal governments before being compiled by the NBS.
Couched in dry tones, the National Bureau of Statistics confirmed:
“The purpose of the revision is to build a modern statistics system in the new era, to improve the authenticity, accuracy, integrity, and promptness of the statistical materials, to give full play to the roles of statistics in social and economic growth and to promote high-quality development.”
Rumors of fudged figures have been circulating for years. But Beijing’s decision to act was incredibly timely as it came just days before third-quarter GDP, or gross domestic product, numbers were announced on October 18.
In a massive data dump from the statistics bureau, GDP growth came in at 6% compared to 6.2% in the second quarter.
A breakdown of the figures showed that factory output increased by 5.8% in September while retail sales were up 7.8% compared to the same period last year. Fixed asset investment also edged higher at 5.4% from January to September.
To complete the stats rollout, urban unemployment remained unchanged at 5.2% last month.
“Despite a stronger September, pressure on economic activity should intensify in the coming months,” Julian Evans-Pritchard, a senior China economist at Capital Economics, said.
“Cooling global demand will continue to weigh on exports, fiscal constraints mean that infrastructure spending will wane in the near-term and the recent boom in property construction looks set to unwind,” he added in a note.
During the past year, China has been squeezed by the trade war with the United States and the switch from a low-value export-driven model to an economy fuelled by high-tech manufacturing and consumer spending.
At least tensions between Beijing and Washington have eased amid hopes that the first phase of a trade deal will be signed by US President Donald Trump and his Chinese counterpart Xi Jinping at the APEC Forum in Chile next month.
“The economy still faces big downward pressure,” Lu Zhengwei, the chief economist at Industrial Bank in Shanghai, told the Reuters news agency.
“We should respond to pressure on the economy but also ensure the macro leverage ratio does not rise. So policy measures will be carried out in a focused and orderly way,” he added, referring to rising debt levels.
Still, plotting a course through the statistical maze to gauge the true health of China’s economy can be daunting.
At times it can resemble a game of numbers as baffling to economists as it appears to be for the National Bureau of Statistics.
“Observers have generally chosen to look the other way, but heightened suspicions of incomplete or inaccurate data are adding uncertainty to what is already an uncertain situation for China’s economy,” Northern Trust, a financial services group based in Chicago, stated in an August report.
“Measurement errors are unavoidable in an economy, particularly in emerging economies as large as China. But skepticism about the accuracy of the official Chinese data has intensified,” the study, compiled by chief economist Carl Tannenbaum, senior economist Ryan James Boyle and associate economist Vaibhav Tandon, added.
Indeed, a report in March entitled A Forensic Examination of China’s National Accounts by the Brookings Institution in Washington showed that China over-reported its GDP growth between 2008 and 2016 by an average of two percentage points.
Startling results were also unveiled by the Shanghai University of Finance and Economics in December when it published its annual transparency survey on the 31 provincial-level regions.
High-tech and manufacturing hub Guangdong topped the poll, scoring 69.38 after supplying nearly 70% of the information requested by researchers from the university’s Public Policy Research Center.
Least transparent was Jiangxi, which is situated in the southeast of the country, with a rating of just 26.98 while the average score was 53.49. “[Unfortunately,] the general level of transparency in China’s local governments remains poor,” the study concluded.
Earlier this year, Leland Miller, the chief executive of the influential advisory company China Beige Book, underlined the problem when he questioned the veracity of NBS statistics.
“The Chinese published GDP numbers are absolute garbage,” he said in February. “It’s certainly the consensus that these numbers are unreliable.”
Judging by Beijing’s latest policy document, the National Bureau of Statistics appears to share his view.