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by Ye Tan A heavyweight contender was added to the list of those questioning China's GDP growth in the first quarter -- the International Energy Agency; it argues that China's first quarter GDP data were inconsistent with a real decline in oil demand, and didn't match the unusually weak demand for electricity. [1] Such voices appeared long ago domestically, after the first quarter figures were released by the National Bureau of Statistics, some scholars and the media questioned the discrepancy between industrial added value and electricity consumption. From the statistics, we see China's GDP grew 6.1% in the first quarter, when oil demand declined by 3.5%; China's industrial production increased 5.1% in the first quarter, but electricity consumption dropped 3%. The importance of statistical data is that it is the basis for policy development in the decision-making levels. Incoherent economic policies will certainly result from statistical data that are erroneous overall. Some local governments over-report GDP for the sake of performance, or under-report it in order to avoid financial burdens, so the NBS has to carry out annual adjustments. From the current situation, due to it being peak of major Central investments in infrastructure, a number of local governments may well say first of all that the “disaster condition” is serious, then later state that everything is rosy, to show the effect of their governance, that the Centre had been wise to direct investment to the regions. No direct driving force for fraud exists in the NBS; their attitude is much more frank. In the conference to release first quarter macroeconomic data Li Xiaochao [李晓超], Director of the National Economy Integrated Statistics Division of the NBS said that in the face of contradictory data, a direct interpretation of an economic phenomenon indeed sometimes could not be clearly given, and hoped everyone would work together to research to find out the reasons why the two figures for individual months were in reverse. On April 10, “The Wall Street Journal” published an article by Tom Orlik who once worked for the Ministry of Finance in the United Kingdom; four days layer Ma Jiantang [马建堂], Director of the NBS, was quick to comment on the article, posting it on the “Brief on trends” column of the NBS website. [2] The “Regulations on Breaches of Discipline in the NBS,” which went into effect on May 1, set up to a system of accountability to curb statistical fraud by leading cadres in the administration of statistics.This provision, recently issued by the Ministries of Supervision and Human Resources and Social Security and the NBS, clearly stipulates that the leadership cadres of the local, the department, and unit are responsible for the results of serious misrepresentation of statistical data. On 6 May, Cheng Zilin [程子林], Director of the NBS Policies and Regulations Division acknowledged in a Xinhua interview that false statistics have a number of complex factors; for many years the issue had not been fully resolved, and in some places and in some agencies there may be a situation of increasing numbers. The current figures are not particularly irregular, because under the current system, the largest 5000 enterprises (accounting for about 50% of industrial output) report directly to the NBS, but the latter cannot require all companies to report to it. As long as higher-level governments allocate resources to lower level governments and firms, the firms will always have a motive to “make up accounts” in order to attract more resources, power: this what “the crying child gets fed” means in terms of statistics. Improvement of statistical methods and analysis of statistical data are equally important, and in the absence of detailed scientific and statistical methods with sharp analytical skills, Bureau of Statistics will be deceived by false figures. NBS officials are making efforts. Recently, Xu Xuanchun [许宪春], an NBS Deputy Director, said there were inadequacies in turnover data, which confirms economists saying that the data is not a reliable indicator of China's domestic consumption. Xu admitted that the official retail sales data including some items that cannot be regarded as consumer spending, such as retail directed at enterprises and government agencies, building materials for housing construction, which should be counted as part of household investment. Retail sales to some extent increase the total of government, business and household consumption, but if government and business consumption is used to pad out turnover, changes in household consumption will not be reflected. Other data, such as unemployment and per capita income are just the same. The NBS in recent years has been making efforts to construct a more convincing survey unemployment rate. Their initial exploration made in 2003 has not yet been introduced, however, and it was the CASS Blue Book on Society that took the first step, with an unemployment rate of 9.04% emerging from their survey earlier this year. As for per capita income, which most people feel has been padded out likewise, the problem for the all-sector median income published by the NBS should not be too difficult; so why after years of grinding is their blade still dull? Changes in China's economy demand major changes in statistical data and analytical methodology. The current statistics cannot keep up with the pace of change of the economy, fights over data occur constantly, each and every research institution does its statistics its own way, neither international nor domestic agencies can form a unified understanding of the economy, and the China brand falls apart statistically. Changes in economic modelling are catalysing a revolution in statistical modes. Between the First and Second World Wars, the US carried out a statistical revolution. After thirty years of reform and opening up, a big change in China must come from statistical ideas to methods. Ye Tan, “Guoji Nengyuan Shu weihe zhiyi Zhongguo tongji shuzi” [Why the International Energy Agency questions China’s statistical data], Meiri jingji xinwen, 16 May 2009 [叶檀： “国际能源署为何质疑中国统计数字”， 每日经济新闻，2009年5月 16日 (http://www.nbd.com.cn/newshtml/20090516/20090516020048843.html). [1] David Winning, “IEA: China 1Q GDP Growth Data Inconsistent With Oil Demand Fall,” Dow Jones, 17 May 2009 [http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=200905140435dowjonesdjonline000216&title=iea-china-1q-gdp-growth-data-inconsistent-with-oil-demand-fall]. [2] See “Ruhe kandai Zhongguo jingji jiansu shiqi de GDP tongji” [How to Treat GDP Statistics in the Period of China’s Economic Slowdown], Zhongguo tongji xinxi wang, 14 April 2009 [： “如何看待中国经济减速时期的GDP统计”， 中国统计信息网，2009年4月 14日 [http://www.stats.gov.cn/tjdt/gjtjjdt/t20090414_402551592.htm]. See also CSC staff, “Beijing Acts to Curb Statistics Cheating, Gain Credibility,” Chinastakes.com, 3 May 2009 [http://www.chinastakes.com/story.aspx?id=1173]. Translated by David Kelly China Research Centre University of Technology Sydney © Copyright 2009 by Boxun News Top of Page |
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