Despite China's economic downturn, the country has consistently maintained a 5% GDP growth rate in recent years, raising questions about data inflation. The National Bureau of Statistics of China recently announced that seven provinces and municipalities, including Jiangsu and Zhejiang, have engaged in statistical fraud.
According to media reports, the National Bureau of Statistics of China has formed 10 inspection teams since late November last year, and has sent them to seven provinces, including Shanxi, Liaoning, Jiangsu, Zhejiang, Hainan, Chongqing and Ningxia, and three State Council departments, including the Ministry of Science and Technology, the State Administration for Market Regulation, and the State Administration of Financial Supervision, to carry out routine statistical inspections.
The inspection team noted that "some enterprises (projects) have inaccurate statistical data." Zhejiang, Liaoning, Chongqing, and Shanxi provinces all cited "interference in statistical work," with Jiangsu province being the most serious. Jiangsu province stated that "relevant regions continue to interfere with data reporting, instructing or directing survey subjects to provide false statistical information."
In January this year, the main leaders of the Jiangsu Provincial Bureau of Statistics and the Jiangsu Survey Team of the National Bureau of Statistics held a press conference, stating that according to the accounting results, "Jiangsu Province will achieve a gross domestic product of 13,700.8 billion yuan in 2024, ranking second in the country; calculated at constant prices, it will increase by 5.8% over the previous year, and the increase will rank first in the country." For a time, "Jiangsu overtaking" and "Guangdong's position as the largest economic province in the country is no longer secure" became hot topics.
China creates image of high growth while simultaneously falsifying statistics
Cheng Xiaonong, a Chinese economist with a background in planning and statistics, told RT-TV that this year, not just Jiangsu and Zhejiang provinces, but all provinces have falsified economic data. If local governments had reported truthfully, with so many businesses closing and industry and commerce paralyzed, the economy would likely have experienced negative growth across the board. Yet, the official Chinese GDP growth figure of 5% is simply outrageous.
"If the National Bureau of Statistics of China really falsified the data in this way, the director would probably have to go to court. Therefore, the central and local governments are cooperating to beautify the data. Targeting Jiangsu and Zhejiang may be the central government's way of warning other provinces. In addition, if local governments want to increase tax revenue, they must simultaneously fabricate the illusion of economic growth. Otherwise, tax revenue should not increase when GDP is negative," he added.
Experts question whether China's official statistics are shoddy work
Keith Naughton, co-founder of Silent Majority Strategies, recently wrote in The Hill that China's economic growth story for at least the past decade has been little more than a propaganda triumph, a testament to the laziness and gullibility of Western media and institutions. Whether it's GDP, economic growth, deflation, or population data, China's official statistics are a shoddy construction that fails to conceal the serious social problems underlying them.
In January of last year, Henan Province revised downward its GDP for the previous year by over 310 billion yuan, shifting the previous year's economic growth rate from a 3.6% decline to a 4.1% increase. The BBC reported that Fujian Province, in addition to Henan, projected a 2.3% year-on-year GDP growth in 2023. However, Fujian "revised" its 2022 figures downward, bringing the growth rate to 4.5%. Similar trends occurred in Jiangxi and Hunan provinces, where economic growth rates doubled in both cases due to the "revised" figures.
The central government has issued economic indicators, and the local governments must achieve their "mission" of falsifying them.
Lai Rongwei, Executive Director of the Taiwan Inspirational Association, told this station that the Chinese Communist Party (CCP) is a "pressure-based" authoritarian system lacking a robust public oversight mechanism. Under this high-pressure system, all Party and government departments face immense pressure. Officials must complete tasks assigned by their superiors; failure to do so will not only impact their future political careers, but also their personal lives and family stability. "In dire economic times, many absurd practices and irrational data emerge, and even contradictory statistics from different departments."
Lai Rongwei analyzed that, particularly at the local government level, the central government's stated goal of achieving 5% economic growth has put immense pressure on grassroots officials to deliver results. Grassroots officials in China are typically rotated every two to three years, and promotions are difficult if their performance on paper isn't impressive. To survive and advance, they are forced to cultivate connections and networks within the local community, leveraging each other's performance. He explained, "When the central government issues directives, local governments will resort to every possible means to 'create' indicators. For example, if the unemployment rate remains stubbornly high, grassroots officials will resort to inventing ways to embellish the data, such as arranging for young people to participate in various temporary activities or volunteer services, in order to stabilize the unemployment rate and meet the target."
Can the central government’s criticism of local statistical fraud respond to international doubts?
Cheng Xiaonong pointed out that China's current economic situation is deteriorating, and the performance of most provinces is poor. Local governments can no longer compete for promotions by comparing performance, leaving only comparisons of performance. The logic for local officials has become: if the central government demands 5% GDP growth, then they report 5%. The problem of Chinese local governments falsifying data is not new; it occurred last year and the year before.
"The Chinese central government is fully aware of widespread statistical fraud, but it cannot publicly acknowledge it. Doing so would be tantamount to admitting a distortion in the entire national statistical system, and the National Bureau of Statistics would face a credibility crisis," Cheng Xiaonong further explained. "The National Bureau of Statistics also cannot honestly admit to exerting data pressure on subordinate units, leading the international community to question its credibility. Therefore, the Chinese central government, on the one hand, denies the existence of pressure to falsify statistics, and on the other, chooses to 'accuse' local authorities of crimes and pressure them to bear responsibility, using this as a tool to respond to international criticism."
Statistical fraud may mislead decision-makers
An editorial in The Paper pointed out that statistics are the "barometer" of the economy and society and the "compass" of scientific decision-making. Truth is the lifeblood of statistical work. Once data falsification occurs, it can not only mislead macroeconomic decision-making and undermine government credibility, but also foster a negative work culture of comparison and falsification. The harmful effects of this are self-evident.
Lai Rongwei pointed out that the CPC Central Committee, seeing "beautified" statistics, might mistakenly believe that China is developing well, leading them to overestimate their own strengths in trade negotiations with other countries. This desire for both appearance and substance will lead to a reluctance to bend, ultimately harming the people of China.
