No reason to believe China falsifies its national economic data

Lawrence J. Lau says although the tampering of economic statistics is a problem in regional government, as evidenced by several recent admissions, central government officials understand the harm it brings. The data they put out is not perfect, but it is the most reliable available

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Why you can trust SCMP

Lawrence J. Lau

Published: 9:17am, 28 Jan 2018Updated: 5:36pm, 28 Jan 2018

The fact that the National Bureau of Statistics does not take the provincial, regional or municipal statistics at their face value is quite well known. Its estimates of the national GDP do not rely solely on the local estimates. Illustration: Craig Stephens

Recently, the National Bureau of Statistics of China reported a rate of growth of real gross domestic product of 6.9 per cent for 2017, an increase from the 6.7 per cent in 2016, and higher than the target rate of growth for the year.

This announcement was welcomed by much of the world as a sign that China has finally and successfully made the transition to its “new normal”. However, it was also met with the usual scepticism in some quarters, especially because of the recent voluntary revelations by Inner Mongolia, Liaoning and the Binhai district of Tianjin, that local officials had overstated their economic data in the past.

The fact that the National Bureau of Statistics does not take the provincial, regional or municipal statistics at their face value is quite well known. Its estimates of the national GDP do not rely solely on the local estimates.

If one compares the GDP-weighted average annual rate of growth of provincial GDPs and the annual rate of growth of the national GDP, all published in the annual China Statistical Yearbook, one finds that, since 1993, the weighted average rate has been consistently higher than the national rate by a couple of percentage points.

A comparison of the weighted average provincial and national annual rates of economic growth. Photo: Handout

If one uses quarterly data, which is available since 2005, a similar picture emerges.