Thursday, 20 June 2013

Number Crunching with Chinese Characteristics

Premier Li Keqiang can't control the exaggerated numbers on China's economy
We cannot help but be amused by the Wall Street Journal's story about China manipulating its numbers to make its economy look good.

How bad is it? Even Premier Li Keqiang doesn't believe in the numbers, according to a confidential memo sent by the US Ambassador Clark Randt that was published by Wikileaks.

Li basically said when he evaluated Liaoning province's economy, the only digits he followed were those from electricity consumption, rail cargo volume and bank lending.

But now even the National Bureau of Statistics is outright saying the figures it gets from provinces and counties are grossly exaggerated.

One example is the economic development and technology information bureau of Henglan, a town in Guangdong province.

A state statistician investigated a sample of 73 firms out of 249 in the data and found 38 of them were too small to be considered large firms so they should not even be included, and a further 19 either stopped production, moved to another town or ceased to exist.

But here's the more damning part -- 71 companies examined by the statistics bureau had an industrial output of 2.22 billion yuan ($362 million) in 2012, but that the local government recorded it as being 8.51 billion yuan, almost four times the actual figure.

What's sketchy is that the firms were supposed to input the data in an online platform, but for some reason staff from the Henglan economic development and technology information bureau input the numbers themselves. Also, relevant government leaders knew about the distortions but chose to ignore them.

And now with the economy slowing down, local governments are keen to look good because economic output affects their chances for promotion.

But what about when they grossly overstate the figures by almost four times?

The NSB was able to discover the exaggerated figures thanks to a whistleblower. But what about other jurisdictions, counties and provinces?

So you have to wonder, is China really the second-biggest economy in the world?




4 comments:

  1. They had better not be crunching/manipulating/downright lying about the numbers as badly as during the Great Leap Forward...

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    1. Hi YTSL -- it's more number crunching on economic figures than grain or rice, but yeah the mentality is very similar...

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  2. actually, I have zero trust in anything CCP posts especially everything is so opaque and many common business statistics are "state-secret"

    one would be a fool if they trust anything from the CCP.

    This stanace beginning to be applicable from CY Leung administration.

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    1. Hi nulle -- The opaqueness makes it not only hard for us to gage what is really going on in China, but also their own people! It's quite funny when you think about it!

      As for CY Leung... his interests seem to lie elsewhere...

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