What is happening to China's GDP statistics?

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Abstract

This paper argues that official Chinese statistics contain major exaggerations of real output growth beginning 1998. The standard data contain numerous inconsistencies. Chinese commentaries castigate widespread falsification at lower levels and question the autheticity of figures emanating from the central statistical authorities. The author speculates that cumulative GDP growth during 1997/2001 was no more one-third of official claims, and possibly much smaller.

Introduction

During a May 2001 conversation with several Chinese economists in Beijing, I expressed doubt that China's recent GDP statistics reflect actual economic performance. Without missing a beat, a Chinese colleague said, “Nobody believes recent GDP statistics.” According to the New York Times, “many economists say the country's real economic growth rate is, at most, half of that reported” (Smith, 2001).

What is going on? I believe that, beginning with 1998, standard GDP data contain exaggerations that extend far beyond the technical difficulties addressed in recent studies (e.g., Maddison, 1998, Meng & Wang, 2000, Ren, 1997). This comment focuses on three matters: quantitative inconsistencies, qualitative information from Chinese commentaries, and suggestions about the possible magnitude of overstatement.

Section snippets

Quantitative inconsistencies

Official figures for recent GDP growth appear in the top row of Table 1. The yearbook figures imply that real GDP grew by 24.7% between 1997 and 2000. During the same 3 years, energy consumption dropped by 12.8%. The implied reduction of 30% in unit energy consumption over 3 years seems implausible, despite the rapid growth of computer manufacture and other activities with low unit energy consumption. Rapid growth of energy efficiency is not a hallmark of China's economy: in 1997/1998, for

Information from Chinese commentaries

Beginning in 1998, Chinese analysts complain that the statistics system has become enmeshed in a “wind of falsification and embellishment” [jiabao fukuafeng]. Extensive commentary in Chinese sources, including many specific and detailed accounts,6 leaves no room to doubt that intentional falsification of economic performance indicators is commonplace throughout the business community and at every level of government. The

Toward an alternate view of recent GDP growth

Since abandoning provincial growth reports, the NBS has offered no public explanation of how its central office derives the figures that serve as official estimates of China's national growth. Pressure to affirm official growth targets overwhelms local and provincial statistical bureaus, Chinese economic analysts, and even international bankers and market researchers whose firms pursue business ties with Chinese government agencies. Can we believe that the central offices of the NBS remain

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