China tries to quell doubts about growth figures with new measures to stop local officials inflating statistics

Martin Choi

China is ready to implement new measures for calculating regional economic output early next year in a move intended to dispel long-standing doubts about its official statistics.

Local officials have long been suspected of cooking the books to enhance their chances of promotion – giving rise to the long-standing anomaly that when gross domestic product figures from all of China’s provinces are added together, the total exceeds the national figure.

The National Bureau of Statistics (NBS) said on Friday that the combined regional figures should now be slightly smaller than the national total because some items of spending do not show up in provincial figures.

It said the new mechanism will unify the standards and procedures for calculating national and regional GDP, adding: “The preparations for the reform are in place and will be officially implemented in early 2020.”

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The bureau continued that the “shortcomings and problems” in the previous system had been gradually exposed and, under the reformed unified accounting system, “regional economic output will achieve basic convergence with the country’s GDP figures”.

The NBS said the system was designed to minimise discrepancies between national and regional economic figures as part of ongoing efforts to enhance the credibility and quality of government statistics.

In the past, the NBS calculated national GDP while provinces calculated their own figures – giving officials an incentive to inflate growth figures to boost their own career prospects.

The new systems should mean that the combined regional figures are less than the national total. Photo: AFP

The NBS had previously tried to address the problem by holding local leaders accountable for data fraud and revised national statistics laws, but the problem has persisted.

In 2001, provincial GDP data was around 10 per cent higher than the national total.

In 2015, aggregate provincial GDP was 6.7 per cent, or 4.6 trillion yuan (US$655 billion), higher than the national figure.

There have also been a number of cases where officials have been caught falsifying data, including in Liaoning province and Inner Mongolia.

The latest reform was first proposed in 2004 and endorsed by the top leadership in 2017.

Under the new system, the statistics bureau will be responsible for calculating figures at a provincial level while the provinces calculate the totals at a local level.

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In 2018, the NBS ran pilot programmes using the new method in the provinces of Zhejiang, Hubei and Shaanxi.

The NBS said historical regional GDP figures would be revised using the new methodology and published in 2020.

“The activities of embassies and consulates abroad, some confidential units that are not suitable for division by region, and military police are only accounted for in national economic figures and not accounted for in regional figures,” the bureau said.

The bureau said that other countries which have implemented a unified national accounting system of this type have found that the combined regional figures were slightly lower than the national total.

For example, in the United States, the aggregate economic output for each state in 2018 was around 0.6 per cent, or US$116.8 billion, less than the national GDP total.

It also widely believed that rapid shifts towards digital and service-dominated growth may mean that growth in many sectors of the Chinese economy has been underestimated.

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