By David Pan
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%, Jiangshu 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 figures, 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.
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