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Growing Gap Between China’s Local and National GDP Figures

By Yang Fang & Wang Qian
Sound of Hope Radio
Created: February 7, 2013 Last Updated: February 10, 2013
Related articles: China » Business & Economy
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A Chinese laborer works at a toy factory in Jinjiang, in southeast China's Fujian province, on June 8, 2010. Provincial GDP statistics and that provided by central authorities continue to diverge, indicating that officials are fudging the numbers, experts say. (STR/AFP/Getty Images)

A Chinese laborer works at a toy factory in Jinjiang, in southeast China's Fujian province, on June 8, 2010. Provincial GDP statistics and that provided by central authorities continue to diverge, indicating that officials are fudging the numbers, experts say. (STR/AFP/Getty Images)

The latest statistics from China’s provincial governments show that in 2012, the country’s 31 autonomous regions and municipalities calculated a total GDP of 57.69 trillion yuan (US$9.25 trillion).

However, this figure is at odds with the national GDP figure announced by the central regime, which is 5.76 trillion yuan (US$924 billion) lower, a discrepancy equivalent to the annual economic output of Guangdong Province. There is a growing trend of conflicting GDP statistics between the central and local governments, and people in economic circles have long questioned China’s GDP data. 

The central and local governments have accounted GPD data separately since 1985, with the sum of local government statistics always higher than the country’s total GDP; this gap appears to be growing. In 2009, the gap was 2.68 trillion yuan (US$430 billion), in 2011 it was 4.6 trillion yuan (US$740 billion), and in 2012 it reached 5.76 trillion yuan (US$970 billion). Wei Sen, Associate Dean of the School of Economics at Fudan University, said the divergence was “fraudulent” and unresolved. 

Wei told the Sound of Hope (SOH) Radio Network that, “the difference has been about 2 trillion yuan (US$320 billion) every year so far, but this year it’s now over 5 trillion yuan (US$800 billion). The economic number from corporate enterprises is not very good, but the number from the government is even higher. In fact, the annual GDP in 2012 is not as high, including power generation, industrial consumption of electricity, and coal consumption for electricity, they are all decreasing to negative figures. So how can it be so high? This means that there is a problem with the Chinese statistics.” 

Chinese mainland media have been blaming the local GDP figure on the “water” factor, when in fact China’s GDP figure has long been called into question by economists. Chen Qian, a financial commentator with China Central Television (CCTV), believes the economic model and method that the Chinese regime uses to calculate the country’s GDP is different from the rest of world. He holds that the real GDP in China is about 5 percent, and on one occasion even ventured that China may have entered a recession.  

Cheng Jiansan, a professor at Guangdong Academy of Social Sciences, agrees. He told SOH that it’s difficult to say whether China’s official statistics are correct.

Cheng said, “The quality of the statistics is questionable. Whether it’s the National Bureau of Statistics or the Municipal Bureau of Statistics, it is difficult to include many statistics in the GDP, so the economy expressed by the overall statistics number can only be a general indication; it’s very difficult to say that it’s accurate. Secondly, based on needs, they’ll make some adjustments to GDP numbers, including at the provincial, municipal, and even county level. This is why the GDP figure can be adjusted even after it has been collected; this makes it even more distorted. Now, people are suspicious of the national statistical figures; this problem has become bigger and bigger. Problems lie in the statistical method, statistical basis, and the adjustment issue. There are problems in all aspects, so the figure is even more distorted, and people believe it even less. This is a very troublesome problem.”

Cheng also said the Chinese economy is a government-led economy with a focus on increasing the GDP figure, so a lot of people manipulate it. 

A Feb. 4 article in Yangtze Commentary said that “watering the GDP number” is the same as injecting water into beef. Local officials are keen on big projects, because these carry high GDP numbers. 

Dr. Jian Tianlun, an economist based in the United States, told SOH that China should not pursue GDP growth, with the excessive infrastructure projects that entails. 

Jian said, “In fact, China has made big investments in infrastructure projects in the last 10 plus years, and caused a great deal of environmental pollution. If this is not properly controlled, i.e. if the quality of investment and environmental impact are not addressed, it will cause a big impact socially and environmentally. It’ll create negative effects in China’s economy, and people’s quality of life. So I think China should not invest in infrastructure projects to promote China’s GDP.” 

It has been reported that China’s Premier, Li Keqiang, also does not believe the GDP number released by China’s National Bureau of Statistics. According to WikiLeaks, as early as March 2007 Li, when he was Party chief of Liaoning Province, told the U.S. ambassador that he didn’t trust China’s GDP figures. He made his own estimates from looking at electricity usage and other datasets, he said.

Read the original Chinese article. 

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