Statistics show that China is cleaning up its dodgy economic data
Beijing is on a mission to reduce the gap between the provincial GDP and the national economic numbers, but at the rate it is improving it will be 2050 before the figures are aligned.
In 2011, the difference between the combined economic output of China’s 31 provinces and the national figure was the size of Turkey’s GDP. By last year that gap had “narrowed” to the equivalent of the GDP of Indonesia - almost US$1 trillion.
Incredible as that may seem, it is an improvement, although incremental. The discrepancy dropped from 11 percent in 2012 to 10.7 percent last year, showing that Beijing has a long way to go in getting its wayward provinces to get their financial houses in order.
The economic statistics routinely embarrass Beijing and undermine the credibility of the annual figures produced by the mainland’s National Bureau of Statistics.
Yet China’s obsessive focus on growth is the reason the figures are so unrealistic. Provincial officials delivering high GDP have traditionally climbed the promotion ladder faster, placing the emphasis on infrastructure building and development in the hope that the short-term boost to economic output would be enough to bump them upstairs.
Combined with tightening control on government borrowing and a slowing economy, the wasteful infrastructure building has resulted in vast numbers of uncompleted or empty buildings and shopping malls or roads to nowhere. Unchecked pollution has poisoned every waterway in the country in this growth-at-all-costs approach.
Beijing has pledged to crack down on these officials and wants to see real returns from the borrowing of government funds. It has its work cut out, with anti-graft officials finding a seemingly unlimited supply of corrupt practices.
But exaggerated statistics from China are nothing new and extend into trade. Exports were at 10.3 percent in January, rising from 4.3 in December, and even imports were up 10 percent last month, confounding industry expectations.
Some of the increase can be ascribed to cargo owners getting their goods out of China before the factories closed down for the long Chinese New Year holidays at the end of January, but the percentage increases were high enough to cast doubts on their veracity.
A more plausible reason given is the false invoicing of China exports to disguise capital inflows into the mainland. Last year mainland exports to Hong Kong increased sharply even though overall Chinese export growth remained soft.
The inconsistent GDP figures and unreliable trade statistics are throwing a wrench in the system. In this era of big data, accurate statistics are required more than ever before by logistics providers and their retail clients overseeing long and complex supply chains.
It won’t be easy with such a vast, centrally controlled government structure, but as the world’s key manufacturing centre and trading giant, China urgently needs to get on top of its dodgy data.
Maybe China should use the GDP of Lesotho as a target this year in the annual provnces vs national economic output show.