Inner Mongolia Latest Region in China Caught Faking Finances

January 8, 2018 Updated: October 8, 2018

Communist authorities in Inner Mongolia recently admitted that they had exaggerated industrial revenue by 26 percent, or 53 billion yuan ($8.1 billion), according to state media on Jan. 3.

The numbers were fabricated using the following method: at the beginning of the year, the finance department sets a target for revenue that is too high. By year’s end, it is difficult to reach the target, but the department reports it anyway, while asking corporations to give funds to the government. With bad loans and fabricated numbers for revenue and expenses, it will appear as if the department reached the goal.

The Chinese regime encourages such dishonest behavior though, as officials are often rewarded promotion by demonstrating their region’s economic productivity. A common saying in China is, “Officials produce figures, figures produce officials.”

This is not the first time Inner Mongolia was caught for flubbing numbers. Last June, the Party’s anti-corruption agency singled out the region for such misdeeds.

Epoch Times Photo
Chinese 100 yuan, 10 yuan and one yuan notes, a photo illustration taken in Beijing. (Fred Dufour/AFP/Getty Images)

Many officials in Inner Mongolia are associated with former Politburo Standing Committee member Liu Yunshan, an official with strong ties to the Party’s opposition faction loyal to former Party leader Jiang Zemin. His faction is in a power struggle with the current leader Xi Jinping and his allies. Since Xi took power in 2012, he has ousted many members of the Jiang faction through a sweeping anti-corruption campaign. It is unclear whether the revelations about fake numbers are related to the Party infighting.

Another region known for faking numbers is Liaoning, a neighboring province to the north. Last January, the Liaoning governor admitted that cities and counties within the province had exaggerated data from 2011 to 2014, representing a fake increase of 20 percent. During this period, the Liaoning party secretary was Wang Min, an official who owed his political promotion to Jiang. Last August, he was sentenced to life imprisonment for accepting bribes totaling 146 million yuan (about $22.4 million).

In 2016, Liaoning also overstated its GDP (Gross Domestic Product) figures, which had actually fallen 23.3 percent.

The state revealed that Liaoning faked numbers by trumping up the amount of land it could collect taxes from—as well as the money it could collect from allowing the use of state-owned assets.

As recently as last month, the Party’s audit office announced that in the third quarter of 2017, 10 cities and counties within Yunnan, Hunan, Jilin, and Chongqing had fake numbers, adding an additional 1.5 billion yuan (about $230 million) to their revenue, according to Chinese newspaper Beijing News.

Given the troubled economic state of the northeastern region, and many other provinces in the country, it is perhaps unsurprising that they are desperate to look better than reality.

According to estimates by American-based Chinese economist Dr. Cheng Xiaonong, out of China’s 31 provinces and directly governed municipalities, 25 are in debt, surviving by relying on funds from central authorities. Only major financial centers like Shanghai and Beijing, as well as the coastal provinces of Guangdong, Zhejiang, Jiangsu, and Fujian are in the black, with a total surplus of three trillion yuan ($453 billion).

Li Jing contributed to this report.

Follow Annie on Twitter: @annieeenyc