Experts Warn of Fake Economic Numbers in China

By Gao Zitan
Gao Zitan
Gao Zitan
June 27, 2012 Updated: July 3, 2012

Epoch Times Photo
A Chinese investor checks share prices at a security firm in Hefei, east China's Anhui province on May 23, 2011. (STR/AFP/Getty Images)

Experts sounded more warnings about China’s official economic statistics this past week. Economist Larry Lang prepared a chart showing that official figures were sometimes two to three times greater than experts’ estimates.

Lang said in a blog article that many local governments require businesses to submit inflated investment, sales, and profit numbers to the National Bureau of Statistics. He compared a touch-screen manufacturer’s numbers as an example. Experts calculated about 50 million yuan (US$8 million) in investments. The city website touted the manufacturer’s investments at almost 120 million yuan (US$28.3 million). Then the company’s annual report had an even higher figure of more than 180 million yuan (US$28.3 million).

China’s Gross Domestic Product (GDP) has been declining, therefore inflated statistics mask the decline, Lang reported in the article. Inconsistencies can also be found in the GDP reported by local governments and China’s central government.

For example, in 2010 the GDP sum of all provinces surpassed those reported by the central government by 3.2 trillion yuan (US$503.5 billion). In 2011, the GDP sum of 31 provinces surpassed the figures reported by the central government by 4.6 trillion yuan (US$723.7 billion).In the first quarter of 2012, the central government said China’s GDP should be 10.8 trillion yuan (US$1.7 trillion). But some media gathered the local-reported GDP and came up with 11.28 trillion yuan (US$1.77 trillion). This is a discrepancy of 480 billion yuan (US$75 billion).

Frank Xie, a professor at the University of South Carolina Aiken, told New Tang Dynasty Television the fact that Chinese enterprises keep two sets of books is an open secret. “Many foreign companies who do business in China have to do the same too. One book is for the company’s internal use, while the other is for tax purposes and reporting to the central government,” Xie said. 

U.S.-based Chinese writer and economist He Qinglian wrote in an article for Voice of America that the Chinese Communist Party (CCP) started keeping two sets of books during the Mao era, with one set of books used to con the public. The National Bureau of Statistics carries on the same tradition by producing two sets of statistics, one for the public and the other for internal use. 

Such fabrications are an integral part of the CCP culture, according to Ms. He: “Fabricating statistics is an innate trait of the CCP and an integral part of its culture. The central government needs to lie to win people’s hearts, and party cadres need to lie to tout their performance.”

Read the original Chinese article

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Gao Zitan