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FT: Fabricated Statistics Cast Doubt Over Chinese Economic Data

FT: Fabricated Statistics Cast Doubt Over Chinese Economic Data
Dave Bredeson | Dreamstime.com

By    |   Tuesday, 14 March 2017 08:20 AM

There has long been skepticism about the reliability of Chinese data, especially as the government has sought to reduce expectations of a protracted slowdown in the world's second-largest economy.

China's top statistician days ago announced that anyone caught falsifying economic data would face zero tolerance and be punished under the law.

In January, the "rust belt" northeastern province of Liaoning said in its annual work report it had falsified reporting of fiscal data from 2011 to 2014.

The combined economic output of China's provinces has long exceeded national output measured by the National Bureau of Statistics, raising suspicions that local officials were overstating performance.

The gap has been narrowing, but the discrepancy between provincial GDP and the national figure was still 2.76 trillion yuan ($399.71 billion) last year, roughly equal to the GDP of Thailand, according to a Reuters calculation.

Meanwhile, the Financial Times examined four provinces that are more reliant than Liaoning on the coal, steel and oil industries. "Shanxi, Shaanxi and Inner Mongolia comprise China’s coal heartland; Liaoning and Hebei together account for almost one-third of China’s steel output," the FT reported.

The FT examined, among other data points, the share of metals and mining (a category that includes crude oil output) in the nominal gross domestic product of Chinese provinces in 2011, but China stopped publishing this data in 2012, the same year the commodity cycle bottomed out.

In its conclusion, the FT found that the other provinces showed a similar pattern in the three key industries: coal, steel and oil. Output values collapsed in 2012, recovered in late 2013 to only plunge again. "The worse period was the winter of 2015-2016, followed by a recovery in 2016,” the FT reported.

“This pattern diverges from reported GDP figures, which show growth speeding up from early 2015,” the FT reported. “Did Liaoning underperform last year, or were its reported data suddenly brought back in line with reality? And what does that imply about the other rust-belt provinces?” the FT asked?

“Liaoning is the most developed and diversified of the three north-eastern provinces, therefore it should have been performing better, not worse,” Andrew Batson, economist at research group Gavekal Dragonomics, told the FT.

The FT also cautioned that “observers must await the release of four years of corrected data from Liaoning — if indeed the true numbers are ever divulged — if they are to find out what really happened to northern China’s economy when the economic books were being cooked.”

Meanwhile, Ning Jizhe, head of the National Statistics Bureau, said violations would be investigated and punished, Reuters reported.

"As soon as there are statistical cases that break the law or faked, it will be voted down, there will be zero tolerance, no appeasement," said Ning, who is also Vice Chairman of the planning body the National Development and Reform Commission. Ning spoke to Reuters on the sidelines of the annual meeting of parliament.

For its part, China's Shanxi province has launched a new campaign against illegal coal mining, according to a document seen by Reuters on Tuesday, as one of China's top producing regions seeks to get tough on cutting overcapacity.

The Shanxi authorities said in the document that they had found some coal mine operators using "fake invoices, fake data, fake graphics" to avoid supervision, and some mines that had been shut down had been reopened.

Shanxi province accounts for a quarter of China's coal output and has pledged to cut 20 million tonnes of overcapacity this year as part of Beijing's plan to remove 150 million tonnes across the whole industry as it battles smog and tries to make heavy industry more efficient.

But recent price gains have tempted some coal mines into producing more than they have been allowed, the Shanxi Administration of Coal Mine Safety and the Shanxi Coal Industry Bureau said in the document, dated March 12.

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).

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China's top statistician days ago announced that anyone caught falsifying economic data would face zero tolerance and be punished under the law.
china, data, fake, financial times
Tuesday, 14 March 2017 08:20 AM
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