- A worker at a textile factory in Jiujiang, Jiangxi province.
- Zuma Press
China’s economy slowed down a fraction in the third quarter of the year. If you believe the figures, that is.
It was the usual script: an undignified scramble for handouts at the news conference, a number just a whisker above expectations and a bounce in the local stock market (which came just before the data was announced at 10 o’clock – surely no one would be unscrupulous enough to break the embargo?).
But the bigger question of whether these figures represent reality—or whether they have benefited from a vigorous rubbing by the restless fingers of Communist bureaucrats—is harder to answer.
The economy grew 7.3% year-on-year in the third quarter, on official figures – not a bad performance by most standards, but China’s softest since the swamps of the 2009 financial crisis.
That makes the leadership all but certain to miss its 7.5% growth target for the year – though ministers have repeatedly said the target is an approximate one and missing it by a fraction of 1% is no disaster.
But the target, a focus of market attention around the world, still represents a powerful incentive to sweeten the numbers. So too do the systems of promotion for officials: When superiors assess their performance, economic growth is at the top of the list.
“GDP-motivated local officials sometimes fabricate the data for their own purposes, for political incentives,” said Harry Wu, an economist at Hitotsubashi University in Japan who also works with the U.S.-based Conference Board and has made a name for himself as a skeptic of China’s official data.
“At the national level we can assume they’ve tried to squeeze out the water, but how they do it or to what extent is never made transparent. It’s not so scientific.”
Mr. Wu also thinks some of the statistics bureau’s unmeasured assumptions, for example about productivity, aren’t realistic. “I believe the official data have huge problems.”
Based on low-profile data on production of individual goods, which he believes are more reliable, Mr. Wu has constructed his own alternative estimates for China’s gross domestic product. They follow the official figures pretty closely most of the time but dive at times of crisis, like the financial fowl-ups of 1998 and 2009 and most recently in 2012, when China’s lavish stimulus program started to trigger worries about bad loans. That, he thinks, is a clear sign of intentional manipulation.
Not all academics buy the idea that China’s statisticians are systematically lying about the economy. Playing Holmes to Mr. Wu’s Moriarty is Carsten Holz at Hong Kong University of Science and Technology, who is skeptical of the skeptics.
“My gut feeling is the [National Bureau of Statistics] does not lie much,” he said. “They fudge things at the margin, but they can’t cheat on a large scale.”
China’s National Bureau of Statistics has promised to come down hard on companies that report sweetened figures, issuing a consultation on new rules earlier this month.
But it will take more transparency from the government itself to quell the lingering feeling that where China’s economy is concerned, even the fudge is watered down.
–Richard Silk
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