Damn lies and Chinese statistics (David Pan - Asia Times)

August 20, 2006 8:18 PM

Copyright - Asia Times


> >
> > GUANGZHOU - Despite Beijing’s repeated warning that it would
> > severely punish officials falsifying economic statistics, the
latest
> > figures show regional officials continue to cook the books to
inflate
> > local economic growth.
> >
> > According to the National Bureau of Statistics (NBS), China’s gross
> > domestic product (GDP) grew 10.9% in the first half of this year.
> > However, the average of GDP growth rates of the 31 provinces on
> > the mainland of China far exceeded 12% during the same period. In
> > real terms, the sum of GDP figures of all provinces was 804.8
> > billion yuan more than the national figure reported by the NBS.
> >
> > Data earlier released by the National Development and Reform
> > Commission shows that every province recorded double-digit
> > growth in the first half of this year, with 23 of them having a
> > growth rate of higher than 12%. Inner Mongolia attained 18.2%,
> > Jiangsu 15.4%, Shandong 15.3%, Tianjin and Guangdong both
> > 14.4%, Zhejiang 14.1%, Henan 13.9%, Guangxi 13.6%, Hebei 13.5%
> > and Sichuan 13.3%. Only three province reported slightly growth
> > lower than the national rate: Yunnan, Ningxia and Gansu.
> >
> > People may ask: which should be China’s real GDP, the NBS figures
> > or those reported by the provinces?
> >
> > “It is common in China that the mean GDP figure of provinces is
> > higher than the national one given by the NBS,” said Gao Huiqing, a
> > researcher with the State Council’s Information Center. “For some
> > years, the provinces’ mean GDP growth figures have been some
> > three to four percentage points higher than the national ones. I
> > believe that the latter is more reliable because the NBS is capable
> > of rectifying the errors found in the provincial reports.”
> >
> > Li Deshui, former NBS director, had once written to point out that
> > the discrepancy between the statistical figures of the local and
> > central governments, a tendency that is worsening every year,
> > stems from the authorities’ ineffective crackdown on falsification
of
> > statistics by local officials.
> >
> > Analysts say the fundamental cause of such a malpractice lies in
> > the problematic statistics system currently adopted in the country.
> > Basically, the NBS and provinces use the same methods to derive
> > GDP figures. Apart from some difficulties on the technical side,
the
> > main problem is in the attitude and mentality of the officials when
> > reporting statistical figures to the central government. Many local
> > officials tend to try to look right by cooking the figures
according
> > to their needs in order to demonstrate their performance.
> >
> > The system-related causes of such malpractice are twofold: 1)
> > Inasmuch as the GDP figure is a “yardstick” to measure the
> > performance of local officials, there is a strong motive for them
to
> > manipulate the statistics; 2) The local governments are given the
> > power to do so.
> >
> > The data that are most easily falsified by local officials are
those in
> > the category of the so-called “soft” information, such as the
> > amount of investment. Another common falsification is duplicate
> > calculation of industrial output, which also constitutes an
> > important part of the GDP. In many regions, trade figures are taken
> > into calculation of the local GDP f
> > igures, causing it to become
> > unjustifiably higher.
> >
> > The current statistics system in China is working by the principle
of
> > “diversified responsibility under a unified leadership”, by which
the
> > NBS claims the nominal leadership, while the all-important matters
> > regarding personnel affairs and allocation of financial resources
are
> > held fast in the hands of the local governments. Thus local
> > statistics officials would be more obedient to their local
> > governments than to the NBS.
> >
> > To overcome this, Qiu Xiaohua, the current NBS director, now sets
> > a task to screen out all false information and the bureau is
working
> > on measures for this purpose. In the hope of eliminating the
> > possibility for local officials cooking the books, the NBS’s long-
> > term goal is to let economic statistics in any given place be
> > calculated directly by the higher authority. For instance, economic
> > data in a province will be directly calculated by the NBS, and
figures
> > in a city calculated by the provincial statistical authority.
> >
> > In a conference in May, Qiu first advocated reform in the current
> > system, saying that the key to ending fraudulent reporting was to
> > make statistical work independent of local governments’ influence.
> > Analysts have pointed out that falsification of economic statistics
> > could bring disastrous consequences for China.
> >
> > By falsifying figures, the local governments will suffer a
credibility
> > crisis among the public. Some social organizations may take
> > advantage of this to spread more false information to confuse the
> > public for their own interests, and people may also be deceived by
> > false figures masquerading as true and scientific.
> >
> > Furthermore, major decisions on macro-economic policy may be
> > led astray on account of falsified information deviating heavily
> > from reality. As some put it, the risky situation is just like “a
blind
> > man riding on a blind horse on the edge of an unfathomable
> > abyss”.
> >
> > In short, infidelity in statistics is not only a problem of
expertise or
> > technicality, nor is it just one of economics and society. It is an
> > unmistakable symbol of unsound political ecology. As long as the
> > performance appraisal of officials by the GDP yardstick and the
> > promotion of officials based on economic statistics is not
banished,
> > as long as the liars and cheaters are not punished, as long as
those
> > who dare to expose officials’ falsification of economic statistics
are
> > suppressed, it is impossible to get rid of statistics falsification
and
> > its disastrous consequences.
> >
> > David Pan is a freelance writer based in Guangzhou.
> >
> > (Copyright 2006 Asia Times Online Ltd. All rights reserved.
> >

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