Authorities Pledge GDP Probe

The Chinese government targets officials for falsification.
An analysis by Michael Lelyveld
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gdp-305.jpg Ma Jiantang discusses China's GDP at a press conference in Beijing, Jan. 17, 2012.

China's central government is taking new steps to fight data fraud after four-fifths of the country's provinces claimed double-digit economic growth rates last year.

In a stinging editorial on Feb. 13, People's Daily blasted local officials for inflating economic figures to advance their careers.

"In some regions or public organizations, leaders are engaged in lying, empty talk, fabricating statistics, or trumping up political achievements," the Communist Party's paper said.

The daily slammed officials for "turning a blind eye to social problems while reporting nothing but good news" and "fabricating statistics to overstate political achievements," the official Xinhua news agency reported.

The editorial came less than a month after the National Bureau of Statistics (NBS) reported that last year's national GDP, a measure of the value of a country's economic activity, rose 9.2 percent to 47.1 trillion yuan (U.S. $7.4 trillion).

But the GDP figures from 31 provinces, autonomous regions and municipalities totaled 51.8 trillion yuan (U.S. $8.2 trillion), a sum 10 percent higher than the national estimate, China's state-sponsored Economic Daily noted.

An RFA review of the data found that 25 of the provincial-level administrations reported double-digit growth, led by Chongqing and Tianjin municipalities with GDP gains of 16.5 percent.

Data inflation

Local data inflation has been a problem since at least 2004, when the NBS found that provincial totals topped the national figures by over 2.6 trillion yuan (U.S. $411.2 billion).

In 2007, investigators found nearly 20,000 cases of falsification, the official English-language China Daily reported at the time. Two years later, the Standing Committee of the National People's Congress threatened "severe" penalties for statistical fraud.

But the problems have persisted, adding to doubts about the accuracy of China's economic accounting after a decade of spectacular growth.

Now, the NBS is pursuing an alternate strategy to improve its statistics by trying to take local officials out of the reporting loop.

On Feb. 14, the NBS announced that 700,000 industrial, service and real estate companies would be required to submit data directly to the agency. The companies account for about 80 percent of GDP, the bureau said.

The new process, which started Feb. 18, will bypass local governments, although NBS director Ma Jiantang stopped short of blaming them for distortions.

"We felt that the data was falsified somewhere, but we could not find out where exactly the data became erroneous because we could not obtain the original data provided by the companies," he said, according to Xinhua.

Earlier statements were clearer about the source of the bogus reporting. "No institutions or individuals are allowed to ask businesses to provide fraudulent information or cook data," Ma said in the Feb. 14 statement posted on the NBS website.

Official pressure

Derek Scissors, research fellow for Asian economics at the Washington-based Heritage Foundation, said data fraud has typically come from local or provincial officials who pressure companies to submit higher figures that support their growth claims.

"The way you document it is you get everybody locally to back you up," he said in an interview.

Scissors believes the latest reform attempt stems from concern about social unrest, particularly in provinces that have reported glowing economic results.

"I think they're getting multiple incidents of unrest in provinces that are reporting great numbers. Everything is supposed to be fantastic," he said. "It puts the central government in a bad position, where they're caught off guard and everyone is pointing the finger at everyone else."

Complaints over land confiscation in Wukan village of southern Guangdong province began last September, for example, but provincial authorities only started to address them on Dec. 20 after mass protests, according to investigators cited by Xinhua. Guangdong reported GDP growth of 10 percent last year.

In October, Premier Wen Jiabao visited neighboring Guangxi Zhuang Autonomous Region to calm residents after reports that the government's tight money policies had forced businesses to shut down. Yet, the region claimed growth of 13 percent.

Scissors said the new statistical steps are more likely to be aimed at keeping the central government prepared for trouble than keeping the rest of the world informed.

"There's a big debate over whether the party leadership sees actual numbers that make sense. They can't see actual numbers that make sense unless somebody is compiling actual numbers that make sense," he said.

The harsh terms of the People's Daily editorial are a sign that Beijing has been blindsided when rosy economic reports are followed by social unrest.

"That's really where the anger is coming from. The NBS can say anything it wants publicly. What they're getting upset about is internal communication. They think things are okay in a certain province and then they find out differently. That's the real issue," Scissors said.

New measures

Aside from direct reporting, the NBS has promised extraordinary measures to prevent tampering with company data.

New software will record alterations to reports after they are entered to "identify illogical changes," the NBS said. The precaution suggests the agency suspects some corruption within its own ranks.

It is unclear whether Beijing also harbors suspicions about the stellar GDP growth rate in Chongqing, where the Communist Party's provincial secretary Bo Xilai holds sway.

Press speculation has been rampant over Bo's bid to join the nine-member Standing Committee of the party Politburo. The promotion seemed assured until recently when Bo's police chief Wang Lijun briefly sought refuge at the U.S. Consulate in Chengdu during an official investigation, The New York Times said.

The incident reportedly took place about a week before the People's Daily editorial and the NBS announcement.


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