Are Chinese GDP Statistics Real?
Well, I think it’s pretty clear that in an enormous, poor, authoritarian country you’re never going to get official statistics that are quite right. But there’s been a lot of disagreement since the recession really hit about exactly how unreliable Chinese economic data is. Officially, their stimulus program is working well and though growth is well down from its peak, it’s still quite robust. But there are a lot of doubts out there, but Jamil Anderlini from the Financial Times casts some further doubt.
The crux of the matter is that in addition to national economic statistics, China’s regions publish numbers. If you tally up the regional numbers, you basically always get a figure that’s higher than the overall national number, presumably because the leadership in each region has an incentive to fudge. And now:
In recent years, provincial figures have suggested consistently the world’s third-largest economy is bigger than Beijing’s published estimate, but the discrepancy appears to have widened this year.
Even state-controlled media reports and editorials have in recent days raised questions over their accuracy.
The Global Times, controlled by the People’s Daily, the Communist party mouthpiece, reported that the public reacted with “banter and sarcasm” to NBS figures showing average urban wages in China rose 13 per cent in the first half to $2,142.
John Makin has a helpful explanation of how China does national accounting statistics and how that interacts with the stimulus.
13 Responses to “Are Chinese GDP Statistics Real?”
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August 5th, 2009 at 9:45 am
I remember in the late 90s China was adding the equivalent of a Baby Bell every year in terms of telecom infrastructure. China still has a long way to go in terms of energy, telecom, and transportation infrastructure. They have the capital reserves to get positive growth numbers for the next few years just by laying down more track, as it were.
Should we be dubious of China’s numbers? Yes, by all means. Is it possible that China’s growth may sputter if the recession doesn’t end soon and exports falter? Possibly. I think this merits further examination.
August 5th, 2009 at 9:49 am
I know China is a dictatorship and all but there really isn’t any point in lying about your GDP. That doesn’t make your population less angry and it makes it harder to actually have the kind of growth that you would like. We spend a lot of time talking about how great democracy is and we seem to have a firm grasp on how democracy works, but how the hell does dictatorship work? If you are a dictator how authoritarian should you be? How much should you rely on disinformation? What choices do you really have in terms of trying to stay in power? If you wanted to turn your country into a democracy, could you actually pull it off?
August 5th, 2009 at 9:54 am
No, they aren’t. They are just what the government says they are. And without a free press to question them, there is no reason to accept China’s numbers. The cool thing about a government controlled press is that you get to say whatever you want. The downside is that nobody believes you. The reality is that China is still growing, but slower than usual. No surprise, everyone is growing slower or declining. China is doing what it always does, artificially pumping its numbers. Which is weird, they’ve actually had better than average numbers for a long time, so why fake the numbers? The real numbers would make us drool already. I guess it’s just their nature. And I’m not talking about the Chinese, it’s the Communist Party that does that crap. Who knows how the people are doing.
August 5th, 2009 at 9:58 am
While there isn’t a motive for China as a whole to lie about GDP (not much anyway), there is motive for the components of China to lie. Provinces, towns, businesses all have motive to lie. The central government is reliant upon information coming up the chain. They obviously don’t trust that information, since the whole is differnet from the sum of its parts. The question then arises, on what basis are they making adjustments?
August 5th, 2009 at 10:04 am
What does that even mean? Are American GDP statistics real?
August 5th, 2009 at 10:12 am
“Who knows how the people are doing”
Well, we do know about that. They are doing much better than they were. Their cities are stunning, and backed by much more than Dubai. I’d rather live here, but the Chinese people are doing pretty well. Much better than a generation ago. The rural areas are way behind the times, but that’s always the case. Hell, there’s a generation between New York City and Manhattan, Kansas. It’s no surprise that the same effect might exist in China.
August 5th, 2009 at 10:22 am
Pretty sure the government proclaimed (and maybe even believed) that everything was going swimmingly during the Great Leap Forward. Hard to say what privations people are going through outside of the urban zones.
August 5th, 2009 at 10:38 am
Everybody fudges numbers. Communist Parties have traditionally been masters of the fudge. Pride plays a big part. Old fashioned pride.
What I really wonder is how China and the Party are rationalizing their growing disparity in wealth. It is hard to fake that with numbers. The classless worker’s paradise has quickly become a class driven society.
Modern China sure is one of history’s great paradoxes. It’s what makes them so fascinating. And dangerous.
August 5th, 2009 at 10:48 am
“..an enormous, poor, authoritarian country…”
Yeah, and the only thing keeping our government afloat is the $ billions in loans from that “enormous, poor authoritarian country”. Maybe we ought to spend more time getting our own house in order.
August 5th, 2009 at 11:21 am
One way to realize that the official numbers are bogus:
- exports and imports are 35% of their GDP
- those numbers have collapsed
- in order for the other 65% of the economy to have made up the difference, it would have had to grow at over 25%
Mind you, since government expenditures are added to GDP, and the Chinese have engaged in a truly massive stimulus program (four times as big as ours, compared to GDP), 25% internal growth is actually not as impossible as it sounds. However, that growth is of a forced and probably very suboptimal nature. A lot is targeted to rebuilding Sichuan province after its earthquake (seems good), a lot more to general infrastructure (could be good, depends), and then there’s a whole bunch that looks more like forced loans getting sucked up by speculators. See http://www.senseoncents.com/tag/size-of-chinas-economic-stimulus/ for some commentary.
But even if their stimulus is fairly productive, it doesn’t seem sustainable. They need exports to recover within a year.
August 5th, 2009 at 12:04 pm
That’s a central problem of dictatorships: getting correct information when all your minions have every incentive to lie. The way to encourage truth telling is to grant people rights and make it impossible to punish people for telling what you don’t want to hear. But that’s almost a democracy!
August 5th, 2009 at 2:07 pm
bbartlog,
If your commentary is true, then riddle me this: what happens if Chinese exports don’t pick up and the Chinese economy starts to unwind? Does anyone else think that is slightly frightening?
August 5th, 2009 at 5:13 pm
No point for dictatorships to lie about gdp? There is a hell lot of an incentive to lie about any performance measures even for a democratic government. A democratict one just does not get away with as much cheating. A dictatorship like China will lie about any performance measure to look better compared to other countries, mainly those with another government system to justifiy the country is run by exactly the same people it is right now. The Sovjet block was notorious lying about gdp.
Maybe try 1984.