How Do you Figure Out China’s GDP Figures?

By Gao Zitan, Epoch Times
February 20, 2011 6:53 pm Last Updated: October 1, 2015 5:36 pm

It's hard to understand China's GDP numbers. The GDP increase of most provinces beat China's national GDP increase. Economists believe, in addition to the hard-to-solve problem of duplication, the statistical data tweaked for political purpose added (China Photos/Getty Images)
It's hard to understand China's GDP numbers. The GDP increase of most provinces beat China's national GDP increase. Economists believe, in addition to the hard-to-solve problem of duplication, the statistical data tweaked for political purpose added (China Photos/Getty Images)
Two pieces of data recently released in China, the national and provincial GDP growth rates, don’t match up.

The National Bureau of Statistics (NBS) on Jan. 20 published economic data for 2010 which showed that the GDP stood at US$5.88 trillion, which is 10.3 percent more than the previous year.

Then, China Economic Net reported on Feb. 16 that that 30 provinces achieved a double-digit GDP growth rate in 2010, and that the rate for 28 provinces was greater than the national rate of 10.3 percent.

The two figures don’t square.

There has always been a big disparity between the local and central government reported GDP growth rates.

Since 1985, the central government and local governments started calculating GDP independently. The sum of the GDP of the local governments has always been higher than the total GDP of the nation, and the sum of local cities and counties' remained higher than the total GDP of the province.

NBS explained that the discrepancy is due to the method of calculating the GDP by a statistical system which causes duplication—but some doubt this.

Dr. Cheng Xiaonong, an expert on Chinese economics and politics and former editor-in-chief of Modern China Studies, told The Epoch Times that no other country in the world calculates GDP by province.

“It would be hard to calculate the inflow and outflow between the provinces if GDP is calculated by provinces, thus no individual province can get the exact number. For example, when the Gross Domestic Product of one province gets transported to other provinces it is likely to be counted as the GDP of the other provinces. This is unavoidable and cannot be solved by the government,” he said.

But in China the GDP is a political barometer, determining whether officials are promoted or demoted. Local officials pursue ever higher figures. Even the career of the director of National Bureau of Statistics is tied to the GDP figures, Cheng says.

The result is that a good deal of number massaging goes on. “They don't care if the numbers are real. China is the only country in the world that plays this game,” Cheng said.

“Considering these two factors, China's GDP data can only be a reference, not real. In democratic countries such as the United States, the governor is elected, whereas the governors in China are appointed. Unless China changes its system, this problem of misrepresented GDP will never be solved,” Cheng added.

High-level Chinese Communist Party officials don’t trust the numbers, either.

In the 07Beijing1760 cable released by WikiLeaks on Dec. 4 last year, Li Keqiang, Vice Premier of State Council, joked about how the numbers were fake.

Li was speaking with former U.S. ambassador Clark Randt at a dinner. They discussed China's economic and trade relations, and Li said that the economy cannot be analyzed by the public GDP data.

He pointed out that while the GDP of Liaoning Province in the year 2006 was among the top ten, the number of city dwellers seeking social welfare was one of the highest in the country, and that their net incomes were below the national average. The income of farmers was even less, half that of urban residents.

Cao Yushu, the director of State Planning Commission Policies and Regulations Department, made a similar admission in an interview with the 21st Century Business Herald.

When evaluating economic data, Li Keqiang focused on things like electricity consumption, the volume of rail cargo, and the amount of loans disbursed. Other data, and especially GDP data, is “for reference only,” he said.

Read the original Chinese article.