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Words, especially those in the form of statistics do a lot to shape our view
of the world. China is an especially interesting case in which the
government attempts to shape our perceptions of China from moment to moment
and there is no "truth" but their truth. You can go to jail there for
trying to discover what's really going on.
Tuesday, April 16, 2002
Analysts wary of fiddling with the facts
TAMORA VIDAILLET of Reuters in Beijing
There are lies, damned lies and statistics.
And then, some critics say, there are Chinese statistics.
China reported another stunning economic growth figure on Tuesday but
scepticism was as ever rife over how that number was reached in a country
renowned for meddling with its official data.
Communist rulers in the world's most populous country have since 1949
inflated figures to create grand economic goals and played them down for
Many analysts at home and abroad are wary of Chinese data given gaping holes
in collection methods, a penchant among government officials to exaggerate
numbers to enhance or protect careers, and contradictions in some figures
Sometimes the discrepancies are glaring. In 1998, when China's economy grew
7.8 per cent, barely missing a national eight per cent target, just one
province grew at a slower rate than the national average, Lehman Brothers
noted in a research report.
Beijing also routinely announces annual growth and other data as estimates
early - in December - and then rarely, if ever, revises them.
And many analysts have questioned disparities between the mainland's stellar
rates of growth and energy consumption, which has lagged far behind for much
of this decade.
When the national statistics bureau confirms Finance Minister Xiang
Huaicheng's report on Tuesday of 7.6 per cent growth in the first quarter,
some analysts will again question the bare-bones breakdown that will be made
Underscoring just how much guess work is involved in analysing China's
figures, some even argue Beijing may have understated its growth given
structural changes in the economy in recent decades and the nation's
inability to measure that shift.
Either way, analysts can but accept the official numbers, which are bound to
keep international investors lining up at the door in China's first full
year as a World Trade Organisation member.
''There are parts (of the economy) being overestimated and parts being
underestimated, it's hard to give an overall estimate,'' said Asian
Development Bank China economist Min Tang.
''Neither side saying China's statistics are accurate or inaccurate has
shown their evidence,'' he said, adding that there was no real way of
challenging or checking official figures.
China has admitted its data is far from perfect.
Straight-talking Premier Zhu Rongji said China had wrung much of the excess
''water'' out of its statistical reporting over the past five decades.
''There is only a little water left. I cannot guarantee there is no water,''
The China Daily declared in an editorial China's data was deeply flawed and
the country needs to reform its statistical gathering system to build a
credible market economy or risk jeopardising economic planning and
''More drastic reforms are urgently needed in the statistical system, in
accordance with international requirements,'' it said.
Provincial officials issued false reports to exaggerate local growth
figures, undermining the collection of economic data, it said.
Investigations revealed more than 60,000 violations of the statistics law in
2001, of which 19,000 cases had been dealt with, it said.
Still, the editorial defended China's politically sensitive headline gross
domestic product number, which has rarely fallen below government growth
''Such a typical robust growth - impressive enough to make China a star
global performer - unfortunately fell victim to suspicion brewed amid a
gloomy global economic outlook,'' it said.
Analysts say the emerging global player has made baby steps towards tackling
the problem and plans to make its statistics more transparent as a freshman
in the WTO, under which it has committed to open its markets to foreign
Central Bank chief Dai Xianglong admitted China's top four state banks had
higher levels of bad loans than officials had previously estimated.
And China's top think-tank, the Development Research Centre, said last month
the country's real urban jobless rate stood at around 10 per cent, nearly
triple the official figure.
According to World Bank economist Deepak Bhattasali, China improved the data
collection for several components of national income statistics including
consumption, investment and trade.
As state firms shut down under wrenching economic reforms, China had
established a number of surveys to detect growth in the swelling service
sector, he said.
''The problem is that much of this is still pretty ad hoc,'' he said. ''So
you get bits and pieces of good data, surrounded by quite a lot of bad
China also plans to adopt the general data distribution system recommended
by the International Monetary Fund sometime this year, a move analysts say
will force China to disclose how it gathers its data and uses it.
As part of that process, which could be unveiled at IMF meetings in
Washington later this month, China would also have to lay out clear plans to
improve its data system, analysts said.
''It would be a considerable step forward in Beijing being more transparent
about the sources and methods for their statistics and what they want to do
with them,'' one analyst said on condition of anonymity. ''It would be a
For now, analysts caution that it is far better to observe the trends in the
economic data than watch the actual numbers themselves - and above all, be
wary of December figures.
* * *
Sort of gives new meaning to the term "virtual reality" doesn't it?
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