Most analysts of China’s economy are aware that government economic data often seem to laugh in the face of reality. However, a case in Guangdong this month appears to reveal the mechanics of how these figures are faked, and at least in this case, who is actually fudging these facts.
The look behind the curtain of China’s statistical shenanigans was provided through a statement from none other than the country’s National Bureau of Statistics. In a statement published on the bureau’s website on June 14th, officials in the local government of Henglan town in Guangdong province were reprimanded for grievously exaggerating the industrial production of the town’s large enterprises.
It seems that the Bureau of Statistics itself is concerned about the accuracy of published data, and has taken to auditing numbers that look particularly suspicious. Since the bureau took the step of publicly reprimanding Henglan officials, we get to see how the books get cooked.
According to the bureau’s statement, in reports on 71 companies in the city, the local government stated that industrial production for 2012 reached RMB 8.51 billion. However, after checking these figures against the actual companies listed and their receipts for the period, the bureau found that actual output was only RMB 2.22 billion. So the actual figures were multiplied by nearly four times.
When the data was compared to individual companies, the results get even more interesting. In examining a sample of 73 of the 249 firms that were included in the city’s economic data, 38 of the companies were too small to qualify as large enterprises and should have been excluded from the survey. Beyond this 48 percent fudge factor, an additional 19 companies had either closed down, stopped producing or relocated out of the city.
In all, that makes 67 out of 73 firms included in this particular sample should not have been there.
The report clearly identifies officials in Henglan’s economic development bureau as the culprits in this case of fantastic figures. It seems that while the statistics are supposed to be input directly by executives of the firms included in the survey, this process was being hijacked by the development bureau, where the staff input the figures into the system directly from their own offices.
The statistics bureau indicated that senior officials in Henglan were aware of these issues before mid-year 2012, but failed to act on this knowledge.
The reason for all of this fakery is not hard to guess. Following customs that still carry on from China’s command economy days, local officials are often pressured to make sure that results for their territory fall in line with the projections made by central, provincial and local government officials. Roughly speaking, if your numbers don’t gybe with what your superiors want, then don’t expect a promotion and a bonus next spring festival.
So lacking the means, energy or imagination to actually influence the economy directly, the officials get creative with the data.
Apparently, the National Bureau of Statistics caught on to what was happening in Henglan thanks to a whistleblower, so perhaps the key to greater transparency in Henglan (and likely many other cities across China) will be to use some of the city’s idle factories to start producing more whistles.
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