No @#$%: China Stats are Admittedly Fictional

The incredible macroeconomic figures the PRC has released in recent decades year in and year out without fail beggar belief. Not only are they exceeding those of most other countries for extended periods of time, but they also show amazing regularity. Most of the time, they come out in line with forecasts made by PRC authorities. Now, however, we are seeing some changes behind the curtain. As the Communist leadership aims to produce more meaningful (read: more accurate) readings of its economic performance, the onus is on statistical authorities to fess up about overstated figures:

China’s top statistician has acknowledged the country’s problems with falsification of economic data, pledging severe punishment for perpetrators in a nod to widespread suspicion that official numbers often fail to reflect true economic conditions.

 “Currently, some local statistics are falsified, and fraud and deception happen from time to time, in violation of statistics laws and regulations,” Ning Jizhe, director of the National Bureau of Statistics, wrote in a column for Communist party mouthpiece the People’s Daily on Thursday.

The thing about China is that they incentivized local- and provincial-level officials to overstate their economic performance. Since their criteria for evaluation was on reporting increases in output, they did so whether they truly reflected what was actually occurring. The leadership sets targets, and the officials are forced to fudge the figures if they do not come up to the level expected. The result? Years and years of pure fabrication that statistical bodies are only trying to deal with now:

Critics of Chinese statistics have consistently argued that political interference in statistical compilation is the problem, not the solution. Communist party officials, especially at the local level, are still evaluated largely on their ability to meet or exceed economic growth targets. For many years, the sum of provincial GDP figures has far exceeded the national total [my emphasis]. The party has taken tentative steps in recent years to reduce the role of economic growth targets in evaluating cadres’ performance, but strong incentives remain.

Ultimately, de-linking the apparatchiks' performance appraisals from raw growth statistics should be the goal. In the meantime, I believe that weighing a broader base of indicators--social and environmental ones as per modern practice in other countries--makes sense. Otherwise we will simply have more and more years of remarkable if highly dubious figures