Official Chinese statistics

If you've read the blog for a while, you'll know that I'm pretty skeptical about how believable the official statistics coming from the Chinese government may be. The Economist is somewhat undecided on the matter . . . sometimes publishing articles that treat the official numbers as legitimate and other times, showing more doubt:

Part of the recent optimism in world markets rests on the belief that China's fiscal-stimulus package is boosting its economy and that GDP growth could come close to the government's target of 8% this year. Some economists, however, suspect that the figures overstate the economy's true growth rate and that Beijing would report 8% regardless of the truth. Is China cheating?

Economists have long doubted the credibility of Chinese data and it is widely accepted that GDP growth was overstated during the previous two downturns. In 1998-99, during the Asian financial crisis, China's GDP grew by an average of 7.7%, according to official figures. However, using alternative measures of activity, such as energy production, air travel and imports, Thomas Rawski of the University of Pittsburgh calculated that the growth rate was at best 2%. Other economists reckon that Mr Rawski was too pessimistic. Arthur Kroeber of Dragonomics, a research firm in Beijing, estimates GDP growth was around 5% in 1998-99, for example. The top chart, plotting the official growth rate against estimates by Dragonomics, clearly suggests that some massaging of the government statistics may have gone on. The biggest adjustment seems to have been made in 1989, the year of political protests in Tiananmen Square. Officially, GDP grew by over 4%; Dragonomics reckons it actually declined by 1.5%.

Of course, The Economist doesn't want to lose sales in China, so the last paragraph of the article blithely re-assures readers that things are improving and that the official numbers are much harder to fudge now than they used to be. That may well be true (I rather hope it is), but in the same way that you can get much more impressive growth from a very small base, you can become much more honest with your numbers when you're starting from pure fiction.

I first posted about my skepticism back in 2004 and most recently in January. Let's just say that I'm still unconvinced.