Chinese local governments rush to admit fake data

https://asia.nikkei.com/Politics-Economy/Policy-Politics/Chinese-local-governments-rush-to-admit-fake-data

113 64 8 years ago

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chris_t2• 8 years ago

The unreliability of those figures will be no surprise to anyone who follows China's economy or politics closely, and I hope this bodes for better quality statistics in the future.

There's a small industry of people who try to measure Chinese growth in other ways that are harder to forge such as railway shipment tonnage and energy consumption; it'll be interesting to see to what extent those methods are vindicated if/when better quality data becomes available.

seanmcdirmid3• 8 years ago

That is known as the Li Keqiang Index. As you might know Li is the current premier, but he has been made pretty powerless by Xi.

anthonyleecook6• 8 years ago

If we assume 20-30% of gdp claim from most of the provinces in China are fake, then that reduces their overall GDP from 11.2T to probably around 9-10T, only about double Japan's 5T, and about half of US's 19T and way less than EU's 17T. Nowhere near taking over US/EU anytime soon, and probably falling into a lost decade for China. And with the 3% gdp growth from US recently, US economy is looking very bright.

fspeech3• 8 years ago

Chinese GDP is not a sum of locally reported GDPs. Locally reported GDPs have always exceeded the total GDP, sometimes by a large margin. Now they may lag.

A large motivation is how the taxes collected are shared between the central government and the local governments. A new tax sharing scheme introduced last year makes underreporting of the local GDPs profitable for the local governments, meaning they get to remit less taxes to the central government.

chris_t2• 8 years ago

Oh, that makes sense. I'd hoped the trend was towards a higher level of reliability but perhaps it's just a change of direction in the manipulation.

yndoendo• 8 years ago

Easter and Western politics, socialize, communism, capitalism, share the same means to an end, political parties trying to retain power and often have nothing to do with the people.

enraged_camel• 8 years ago

Should we continue to trust the Chinese government when they report improvements in other areas such as green energy and clean air? How can we know those numbers aren’t doctored like these ones were?

dovdovdov• 8 years ago

“I only believe in statistics that I doctored myself”

― Winston S. Churchill

imron2• 8 years ago

"Don't believe everything you read on the Internet"

-- Abraham Lincoln

mikeash• 8 years ago

At least clean air in cities can be verified just by being there.

ithinkinstereo• 8 years ago

Well, the Chinese are strongly incentivized to actually fix those issues, so while they may lie in the near-term, I do believe they're _actually_ committed to addressing these problems.

Outside of economic stagnation, environmental disasters are the no. 1 perceived threat today to rule & order by the CCP.

anthonyleecook6• 8 years ago

actually you are correct; local governments in China have been known to fake air data

https://medium.com/@shanghaiist/officials-use-mist-cannon-to...

and this year, Shanghai's air pollution has been worse than Beijing. Some say due to the cold air pushing the pollution down this year.

https://unearthed.greenpeace.org/2018/02/12/shanghai-air-pol...

seanmcdirmid3• 8 years ago

Beijing actually made huge improvements using drastic methods to eliminate coal consumption in the rural regions surrounding Beijing. This has made heating a bit bothersome (some poorer or colder villagers, natural gas shortages), but has improved air quality substantially.

coldcode• 8 years ago

Eventually faking economic data has real consequences since economics inevitably happens anyway. At some point you just look like an idiot.

anthonyleecook6• 8 years ago

Exactly! Actually this should be more of a big deal. This is a MASSIVE accounting fraud, the kind that brought down Enron in 2000

cscurmudgeon• 8 years ago

This is what happens when you trust but don't verify on a global scale.

joelb20142• 8 years ago

I'll be interested to see if this leads to a massive shakeup in local politics from Beijing. I can't imagine they're pleased with the amount of doctored data (unless they already knew and were using it to appear stronger on a global scale)

nerbert• 8 years ago

When I read the title, I immediately imagined China faking growth at a global scale and maximizing its importance. It's not the case at all:

Of the 31 provinces, direct-controlled municipalities and autonomous regions in China, three have already admitted falsifying certain economic data. Starting with the northeastern province of Liaoning in January 2017, the Inner Mongolia Autonomous Region and the city of Tianjin have said their statistics were wrong.

Of the three, only Tianjing has admitted doctoring the overall provincial gross domestic product figures. Liaoning and Inner Mongolia had padded something else: their fiscal revenues.

joelb20142• 8 years ago

I had thought the same but I'm still wondering if it was a proxy to cover something else (ex. ability to pay debt obligations) that would have had ramifications in the global market

fspeech3• 8 years ago

These numbers came out after shakeups. New local leaders (like company boards after an accounting scandal) want to get their base numbers low -- making their own GDP goals a lot easier to achieve.

ksec3• 8 years ago

Of course they knew about it. It is just when one province do it, others have to do it too. There aren't any Top party members who hasn't been a head of region at least once when they were ranking up the ladder. So not only did they knew, they properly have done it themselves.

Now Xi is trying fix what's wrong. ( Only if you are not reading too much into it )

gourou• 8 years ago

More details about their economic data

https://www.nytimes.com/2018/01/18/business/china-gdp-econom...

imron2• 8 years ago

Government bureaucrats were promoted based on GDP and tax revenue, and I for one am shocked, shocked, that this led to inflated GDP and tax revenue figures!

Bucephalus355• 8 years ago

China has a long history of doing this.

During Mao’s reign, agriculture numbers were padded constantly. They were only padded by a few percent at each level, but as each reporting hierarchy added its own padding, eventually you got massive overestimates.

This is why 50 million people died in the famine under Map, more than the Holocaust and “gulag archipelago” combined. I don’t think people realize just how bad it was, it was a time of absolutely insanity and deprivation.

40% of all building structures were torn down between between 1958-1963 if that gives you any idea of how detached from reality society under Mao was.

Also, China is lying about their pollution numbers, and just simply moving the factories farther west. Western China is one of the most rural parts of the world and its very hard to measure / prove who is using what / polluting what. No matter what the US does regarding global warming, it’s very likely any gains will be “eaten” by a growing, data faking, Chinese government.

DontGiveTwoFlux• 8 years ago

Citations needed.

talloaktrees• 8 years ago

https://en.m.wikipedia.org/wiki/Great_Leap_Forward

simias2• 8 years ago

You shouldn't be downvoted. Those are harsh accusations, they deserve sources. Because it fits what most of us expect the Chinese government could be doing makes it even more important to have sources, confirmation bias is the enemy of rational thinking.

castle-bravo• 8 years ago

Read Tombstone by Yang Jisheng.

chaostheory• 8 years ago

I don't feel that it's actually needed in this case but here you go. It's like asking for a citation confirming that France was key for the American colonies winning their independence from GB

https://en.wikipedia.org/wiki/Great_Chinese_Famine

Yang Jisheng (30 October 2012). Tombstone: The Great Chinese Famine, 1958-1962. Farrar, Straus and Giroux. p. 240. ISBN 978-0-374-27793-2.

Kimberley Ens Manning; Felix Wemheuer; Gao Hua (1 January 2011). "Food Augmentation Methods and Food Substitutes during the Great Famine". Eating Bitterness: New Perspectives on China's Great Leap Forward and Famine. UBC Press. p. 177. ISBN 978-0-7748-5955-4.

Ralph Thaxton (5 May 2008). Catastrophe and Contention in Rural China: Mao's Great Leap Forward Famine and the Origins of Righteous Resistance in Da Fo Village. Cambridge University Press. p. 128. ISBN 978-0-521-72230-8. Jump up ^ Yang Jisheng (30 October 2012). Tombstone: The Great Chinese Famine, 1958-1962. Farrar, Straus and Giroux. p. 126. ISBN 978-0-374-27793-2.

Dali L. Yang (1996). Calamity and Reform in China: State, Rural Society, and Institutional Change Since the Great Leap Famine. Stanford University Press. p. 65. ISBN 978-0-8047-3470-7.

IntronExon3• 8 years ago

The entire movement was based at least in part on the lies and padding of Lysenkoism, showing how padding and lies and tragedy begets more of the same.

ksec3• 8 years ago

I read the first sentence and I thought someone knew about the Chinese History, instead the long history begins with Mao's reign.

Yes, China has a long history of doing exactly this but it goes back to as far as thousands of years in all the different dynasty.

The only good thing is with all the surveillance in place, and the Anti - (selected) corruption happening this may actually work. ( Or may be not )

anthonyleecook6• 8 years ago

"In Liaoning Province tax receipts and income from various fees were padded by 20-30% according to counties and cities during the period of 2011-2014. Inner Mongolia has said that 25% of the fiscal revenue stated for 2016 were actually fake."

That actually validates some of the slowdown that I saw while I was in China. Business felt slow, and it seems that there wasn't the fast feel anymore compared to 2007. Very little small company activities, and alot of economic activities seem to involve state-owned companies (and we all know how slow they are).

If we assume 20-30% fake data across most of its local provinces the last couple of years, this would probably place China's GDP growth at around 1% a year (maybe even negative), way below 7% consistently claimed by the government. However, the 1% would be consistent with the drop in exports in recent year.

ksec3• 8 years ago

I just wanted to add, my view is while they are not moving as fast as say 2007 or 2010. They are still fast. Certain places may not be growing as quick, but other places like West China and Mid China are moving at super fast pace. ( That is where all the government money at the moment )

vfulco• 8 years ago

Gut feel, last year was negative growth from all the complaining of my foreigner friends (midlevel and higher execs) in SH

tootie• 8 years ago

If this works, then it's a great move by Xi. Pay down that fake data debt in a controlled way instead of waiting for an implosion.

jensv• 8 years ago

实践是检验真理的唯一标准，自冷战结束以来，世界上只有中国在经济规模上，缩小了和美国的差距。

Practice is the only criterion for the test of truth, and since the end of the cold war, only china has been able to narrow the gap between the United States and the United States

jacquesm• 8 years ago

According to GT that reads:

"Practice is the sole criterion for testing truth. Since the end of the Cold War, only China has narrowed its gap with the United States in terms of economic scale."

anthonyleecook6• 8 years ago

China's advantages to a booming economy in the early 2000s are all withering away, however. Demographics: China is actually projected to have less than 800M population by 2100. Foreign direct investment: leaving to higher growth areas like India and Vietnam, partly also due to capital controls. Cheap labor: wage inflation is causing manufacturing to move out of China. Large labor force: China will have one of the oldest population by 2050, with working forces retiring. Tech growth: surveillance, great firewall, pollution, economy slowdown will spur talents to leave China.

thisisit• 8 years ago

And what happens if people are actually faking (lying) about reporting fake data?

If these government official were lying, giving them incentives to admit they are lying is the worst outcome I can think of.

arisAlexis• 8 years ago

that's why there is a solid case for government blockchain usage

Chinese local governments rush to admit fake data

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