How reliable is China's economic data? Analysts and economists argue that proprietary data such as domestic travel, international trade, and air pollution levels better reflect China's economic activity than the official GDP growth rate. It often depends on the numerical value of
It turns out that the Chinese government is also concerned about the reliability of the data. Last week, China's state news agency Xinhua reported that a draft amendment to the country's statistics law, aimed at combating statistical fraud and strengthening legal liability, had been submitted to China's legislative body, the National People's Congress. .
Outside observers need transparency about how authorities compile certain data sets if trends start to become disconcerting, or how decisions are made to suspend certain data points, such as youth unemployment. skepticism may be justified by pointing out the lack of .
According to a US diplomatic cable released by WikiLeaks in 2010, even former Chinese Prime Minister Li Keqiang said that China's GDP statistics were “artificial”. Mr. Li reportedly relied on the Li Keqiang Index, a measure of his own economic activity. economist, This is a combination of rail freight traffic, electricity consumption, and total bank loans. (Bloomberg notes that the index has fallen out of favor as China's economy shifts towards services.)
Even in private companies, accounting scandals continue to occur. In 2020, Chinese coffee chain Luckin Coffee confessed that it had falsely inflated its 2019 sales by 2.12 billion yuan ($292 million). The resulting scandal led to the company's expulsion from the Nasdaq stock exchange and spurred a U.S. threat to delist all Chinese companies on U.S. stock exchanges if they did not expose them to regulatory oversight. Ta.
Chinese regulators recently accused struggling real estate developer China Evergrande Group of inflating its 2019 and 2020 revenues by about $80 billion. The amount alleged is the largest ever for a major fraud.
What is the reason for the ambiguous data on China?
Analysts say the problem is not due to top-down statistical manipulation. Bernard Au, chief economist for Asia Pacific at credit insurer Coface, said the more serious criticism revolves around “deliberate data falsification by local governments.” He cited proposed changes to the data law as an example of how the Chinese government plans to address the issue.
Dan Wang, chief economist at Hang Seng Bank (China), said local governments tend to obscure the real state of the economy. “Local government officials sometimes overreport because it is a way to assess and ultimately promote local economic performance, but they also underreport local problems,” she says. Mr. Wang agrees that statistics laws need to be amended and that local authorities should be held accountable for intentionally misreporting data.
She added that the National Bureau of Statistics (NBS) has a history of “smoothing” data series, so the declines and increases are not as dramatic.
The unpredictability of China's data reporting is worrying observers, suggests Christopher Bedore, Gabekal's deputy director of China research. “When you have an economic downturn, there are always questions,” he said, adding that China “kind of shot itself in the foot” when authorities stopped reporting youth unemployment data. added.
China's youth unemployment rate (defined at the time as people aged 16 to 24 without a job) hit a record high of 21.3% in June due to a slowing economy and a tight job market, including in high-tech sectors. Then, in August last year, the Chinese government unceremoniously suspended the publication of youth unemployment data, citing the need for “further optimization.”
The Chinese government measured the youth unemployment rate in December, and it showed a significant improvement to 14.9%. NBS said the new methodology gave a more accurate picture of unemployment by excluding students.
Bedore believes China's data reporting has improved in the 15 years he has been observing the country, but that progress has not been linear.
“It's not one step forward and two steps back. Sometimes it's one step forward and one step to the side,” he says.