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Thread: Chinese province admits falsifying economic data for years

  1. #1
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    Chinese province admits falsifying economic data for years

    Chinese province admits falsifying economic data for years
    by Sherisse Pham
    January 18, 2017


    Longstanding doubts about the accuracy of China's economic data just got a big piece of supporting evidence: The governor of an entire province has admitted that local officials cooked the books for years.

    The embarrassing revelation comes just days before the closely watched release of China's national economic data for last year.

    Governor Chen Qiufa of Liaoning, a major industrial region in northeastern China, said this week that false statistics boosted the province's economic data from 2011 to 2014, according to China's official state news agency Xinhua.

    Experts and even some government officials have long viewed growth figures from the world's second-largest economy with a healthy dose of skepticism. But Chen's admission is particularly candid.

    In some cases, officials inflated government income by more than 100%, according to Xinhua. Revenue for one Liaoning county was reported to be 2.4 billion yuan ($350 million) in 2013, but an audit office later corrected it to 1.1 billion yuan ($160 million).

    Central government inspectors warned Liaoning officials of "the prevalence of economic data fraud" back in 2014.

    The province's numbers aren't looking so good anymore. It reported last year that its economy was shrinking as traditional industries suffered.
    It had the worst performing economy out of 31 regions across China in the first quarter of 2016, according to Xinhua.

    "Our province failed to meet the expected targets," Chen said of Liaoning's disappointing recent figures. The province has a population of 43 million, bigger than that of California.

    China's overall economy expanded 6.7% in the third quarter of 2016, right in line with the previous two quarters. Economists expect it to have grown at a similar pace in the fourth quarter, too.

    Some analysts who are dubious about China's remarkably smooth numbers turn to proxy measures to gauge the health of the economy. They look at electricity output, freight shipments and seaport cargo volumes.

    China replaced the head of its National Statistics Bureau last year.

    The new chief, Ning Jizhe, said last month that the falsification of local statistics still happens in some areas from time to time, warning of heavy punishment for those who fake official figures. Link
    _____________

    Just gonna file this one under "Things Of Absolutely No Surprise To Anyone"
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  2. #2
    Turbanator Senior Contributor Double Edge's Avatar
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    DOR correction factor is 25%

    Will that be revised.

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    Quote Originally Posted by Double Edge View Post
    DOR correction factor is 25%

    Will that be revised.
    No need.

    There's more than one way to falsify real economic growth data, and some will negate others.

    There has also been a shift from all-out pursuit of high growth rates to striving to have a high quality growth rate. So, making one's growth rate look lower now might be the new ticket to promotion. It certainly helps get extra funding from the Central People's Government.

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    Turbanator Senior Contributor Double Edge's Avatar
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    Am trying to understand what high quality means here.

    Does a lower growth rate mean assistance required as in could do better.

    Does a high growth rate mean funding required to sustain said rate.
    Last edited by Double Edge; 19 Jan 17, at 12:55.

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    Quote Originally Posted by Double Edge View Post
    Am trying to understand what high quality means here.

    Does a lower growth rate mean assistance required as in could do better.

    Does a high growth rate mean funding required to sustain said rate.
    I think a lower "quality" growth results from a higher return on investment per yuan spent (i.e. improving productivity per work) or not burning through non renewable assets (i.e. pollution and the environment) so much.

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    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Double Edge View Post
    Am trying to understand what high quality means here.

    Does a lower growth rate mean assistance required as in could do better.

    Does a high growth rate mean funding required to sustain said rate.
    In the Chinese economic lexicon, quality is the conceptual opposite of quantity. Rather than focus on a minimum 7% real growth (quantity), “quality growth” seeks to achieve greater reliance on household consumption than capital investment. It also might – the jury’s out – mean manipulating economic definitions to take into account resource depletion and environmental damage.

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    Senior Contributor DOR's Avatar
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    File this under “You can’t make this stuff up.”

    By the way, this is the official version ...

    Having Fun with China Statistical Database

    ——A Guide to Statistical Database

    http://data.stats.gov.cn/english/sta...=aboutctryinfo


    When using the database, you can view statistical data classified by industries and registration types. Those are statistical standards. Statistical data have to follow some standards and rules to conduct surveys so as to ensure the scientific reliability and preciseness of data.

    Statistical standards keep up with the times to better fulfill the current needs of economic and social development. Therefore, when you use the data, you need to first understand the changes in statistical standards, so as to conduct comparative research wisely.

    Every statistical field had established special statistical system. Clear regulations on survey purpose, scope (overall), method, content and format, reporting period, data submission method are the basis for statistical survey.

    To understand the meaning of statistical indicators is the premise of using statistical data accurately. Every statistical indicator has its own unique meaning, scope and effect.

    Some examples:

    The actual growth rate of total retail sales of consumer goods = nominal development rate of total retail sales of consumer goods / retail price index in the same period * 100-100.

    [Um, *100-100 is the same as *0 …]

    V) Little Housekeeper - Release schedule [somebody ain't woke]

    In order to facilitate users to get the release dates and achieve the latest data on time, the "Release schedule" column is arranged on the home page, in the form of a calendar with the specific marked dates. The update will also be displayed so that you use the latest data quickly.

    (VI) "SouShu" App
    How can you put massive data into your pocket? [wink, wink, nudge, nudge]

    [Finally,]

    Grasp the overall situation and the principal contradiction

    The national economy is a complex organic whole, involving all aspects. Each indicator has its own specific meaning, which reflects a particular aspect of the economy and has its specific purpose. Therefore, to fully grasp the economic situation, one cannot judge the economy with one or two indicators. One should conduct a more comprehensive analysis on the main indicators of the national economy, examine the economic operation from the side as much as possible, and make the overall judgment from interconnected and integrated perspectives. For example, economic growth rate, inflation, unemployment, and balance of payments are four indicators that one should concern when observing and analyzing international economic situations. Meanwhile, one should also pay attention to changes in inventories, purchasing managers' index and other micro indicators, as well as some indicators in monetary, fiscal, and financial markets. Using various types of major economic indicators flexibly, one can figure out the general characteristics of economic performance.
    Trust me?
    I'm an economist!

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    Senior Contributor Oracle's Avatar
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    China's GDP Growth Pace Was Inflated for Nine Years, Study Finds

    (Bloomberg) -- China over-reported its economic growth between 2008 and 2016 by an average of 1.7 percentage points, according to a recent study by researchers at the Chinese University of Hong Kong and the University of Chicago. The discrepancy came from local governments who are rewarded for meeting growth and investment targets, the authors say in a draft paper published by the Brookings Institution. The Beijing-based National Bureau of Statistics, knowing such manipulation well, has been adjusting the local numbers but hasn’t done so sufficiently since 2008, authors Wei Chen, Xilu Chen, Chang-Tai Hsieh and Zheng Song wrote.

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    “Local statistics increasingly misrepresent the true numbers after 2008, but there was no corresponding change in the adjustment made by the NBS,” they wrote. They instead use numbers such as tax revenue, satellite night lights, electricity consumption, railway cargo flow, exports and imports -- less likely to be fudged, to predict the actual gross domestic product of the world’s second largest economy.

    The revised numbers “indicate that the slowdown in Chinese growth since 2008 is more severe than suggested by the official statistics,” they wrote. China’s NBS didn’t immediately respond to a request for comment.

    China’s GDP has long been criticized for either over- or under-estimating growth, or for smoothing out the fluctuations in real economic activities. Local authorities, eager to achieve economic growth goals so as to improve their own chances of promotion, used to report regional GDP figures that when summed would be more than 10 percent larger than the official national figure.

    In recent years, the national authority has cracked down on fudging statistics by collecting data directly from firms, naming and shaming officials as well as setting up a specific inspection arm. The head of the statistics bureau claimed last year that the problems were all in the past, and from 2019, it will start to compute GDP for the 31 domestic regions.

    Tom Orlik, chief economist for Bloomberg Economics and author of "Understanding China’s Economic Indicators" says he is “cautious” about the paper’s conclusions.

    The NBS has made "determined efforts" to squeeze out the impact of local exaggeration since the 1990s, and the argument that local officials have overstated investment is hard to square with the well-known narrative that China’s capital spending rose too much, he wrote. The authors base their estimate of the “true” rate of GDP on tax revenue, but that may have reflected a larger services sector, and should not be taken as more accurate than other official indicators, according to Orlik.

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    Politicians are elected to serve...far too many don't see it that way - Albany Rifles!

    Loyalty to country always. Loyalty to government, when it deserves it - Mark Twain!

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    China’s economic census uncovers more fake data as officials promise ‘zero tolerance’ to data manipulation

    Officials in the central Chinese city of Guanghan have been found to have gone to extraordinary lengths to manipulate raw data to obscure the real picture of the health of the economy, according to the National Bureau of Statistics, in the latest case to undermine the accuracy of economic data in the mainland.

    Local census staff from the county-level city in southwestern Sichuan province, which has a population of more than 600,000, had been instructed by local officials to create a system that required towns and industrial estates to provide data “matched” to a predetermined target for overall gross domestic product.

    In particular, under pressure from the local government, industrial firms falsified detailed data on business revenues, depreciation of fixed assets, payroll, and operating profits.

    Government officials also tried to block law enforcement officials from inspecting its data and violated the regulation requiring the statistical bureau to take responsibility for filing accurate data on progress in meeting economic targets, according to a National Bureau of Statistics (NBS) report published earlier this week.

    “Even though Beijing has tried to de-emphasise 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,” said Aidan Yao, senior emerging Asia economist at AXA Investment Managers.


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

    The NBS, who have been disclosing statistical irregularities since the end of 2018, has handed the case over to the provincial government for further investigation and possible punishment. The statistical bureau said it was scrutinising 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, with local officials under pressure to deliver economic achievement to meet promotion criteria.

    “When the [growth] 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 national economic census, conducted every five years since 2004, looks at a series of annual data, mainly from the industrial and service sectors.

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

    In Yunnan, officials from one county intervened in the calculation of industrial census data in the name of “research,” according to a published report.

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

    A slew of economic data for May, including fixed asset investment and industrial output, indicated continued weakness and suggested the need for more economic stimulus.

    “Given the root-problem lies deep in the system, data manipulation can occur in both down and up economic cycles. It is possible that the urge to manipulate in the down cycle is greater, given the political pressure, but I think the key lies more with the level of tolerance [from top officials] versus [the frequency and thoroughness of] inspections by the central government,” added AXA’s Yao.
    Politicians are elected to serve...far too many don't see it that way - Albany Rifles!

    Loyalty to country always. Loyalty to government, when it deserves it - Mark Twain!

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