Chinese Statistics

From: Grant Callaghan (
Date: Mon Apr 22 2002 - 16:05:57 BST

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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
    damage control.

    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
    made available.

    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

    Underestimated growth

    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,''
    he said.

    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.

    Making headway

    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
    good step.''

    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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