Home News Officials faked economic data and tried covering their tracks

Officials faked economic data and tried covering their tracks

Getty image

Officials in a central Chinese city have been found to have gone to extraordinary lengths to fake economic data and try to cover their tracks.

The National Bureau of Statistics said that the city, Guanghan, told census staff to create a system that required towns and industrial estates to provide data “matched” to a predetermined target for overall gross domestic product.

Bad data obscures the real picture of the health of the economy and could mislead policymakers and investors alike, sometimes to disastrous effectMistrust of China’s economic data has historical roots. In the late 1950s, officials exaggerated grain production to meet the aggressive goals set by Chairman Mao’s Great Leap Forward campaign of rapid industrialization and collectivization. It is estimated that millions of people died unnecessary deaths between 1958 and 1962, including from famine..

Guanghan (population 600,000) is no big town, but it provides a useful case study of why and how economic numbers could be fudged in China.

In 2018, Guanghan reported that its economy grew 9% to 45.1 billion yuan ($6.5 billion). That was significantly more than the national average of 6.6%.

The National Bureau of Statistics (NBS) said the city achieved that in part by cooking the books. 

When the number is good, it doesn’t necessarily mean promotion. But when the number is bad, it could become the reason for not being promoted-

Xu Jianwei, economist

Under pressure from the local government, industrial firms falsified detailed data on business revenues, depreciation of fixed assets, payroll and operating profits, NBS said in a report published this week.

Government officials also tried to block law enforcement officials from inspecting its data.

Aidan Yao, a senior emerging Asia economist at AXA Investment Managers, put the blame on rogue local officials.

“Even though Beijing has tried to de-emphasize economic performance by moving to a more comprehensive, broad-based set of criteria [for evaluation] of local officials, the shift in the mentality [of local officials] will take time,” he said.

“And so long as economic growth remains key for the nation as a whole, completely removing data fraud at the grassroots level of the political system, particularly at the city and prefecture levels, will be difficult.”

This case has now been handed over to the provincial Sichuan government for further investigation and possible punishment. 

The NBS also found census-related data manipulation cases in Baicheng, a prefecture-level city in the northwestern part of Jilin province, and in two counties in the southern Yunnan province.

A worker in a textile factory in Suining, Sichuan province.
A worker in a textile factory in Suining, Sichuan province. Photo: Reuters

The NBS has been disclosing statistical irregularities since the end of 2018. It said it was scrutinizing local data with “zero tolerance” for forgery.

Doubts over the quality of China’s economic data have risen in recent years, especially after large-scale manipulation of economic data was revealed in Liaoning province, the Inner Mongolia autonomous area and the city of Tianjin. 

In those cases, local officials were found to be under pressure to deliver economic achievement to meet promotion criteria.

“When the number is good, it doesn’t necessarily mean promotion. But when the number is bad, it could become the reason for not being promoted,” said Xu Jianwei, senior China economist from Natixis.

China’s economic growth has been under increasing pressure recently, partly because of the impact of the trade war with the United States.

(Original article on www.inkstonenews.com by Sidney Leng)