A Statistic Above Reproach?

Last Thursday, China’s National Bureau of Statistics announced that the nation’s growth rate fell to 10.1% for the second quarter – marking its fourth consecutive month of decline. This state-owned media reported the number with somber distance, noting that it reflected deteriorating economic conditions abroad, while also – in a couple of cases – noting that all was well so long as the number remained over 10%. For example, China Daily reported:

“Since the economic growth rate is still above 10 percent, it is too early for an explicit relaxation of policy controls,” Huang Yiping, an economist with Citigroup, said.

Likewise, foreign media – including foreign media based in China – reported the growth number as given, with no questioning of whether or not it is an accurate number, nor whether or not Beijing has an interest in propping it up beyond 10%.

Just to be clear: I have no idea whether or not the number is accurate, and I have only the most basic understanding of how this number is computed on a quarterly basis. That noted, I can’t help but be struck (for the 25th time since 2002) by the contrast between the foreign media’s aggressive approach to debunking other Chinese government-issued statistics in which they sense even a hint of self-interest (SARS infections in 2002, Olympic air quality measurements in 2008, etc etc etc), and the limp, press-release style reporting that greets these quartertly numbers.

In one limited sense, the debunking is relatively easy: it’s a widely known and accepted fact that Party cadres are graded partly on the economic performance of their respective jurisdictions (and, in some cases, government-owned companies). Among people with whom I talk, it’s long been assumed that this grading system has long resulted in inflated economic statistics. However, now that China’s economy is quite obviously being impacted by the global economic slowdown (and especially declining export demand from the United States), the incentive to fudge numbers is greater now than it has been since the late 1990s.

At the same time, I can’t help but think that the Politburo isn’t exactly acting like a bunch of fellows sitting on top of an economy posting 10%+ growth. In the last couple of weeks, the very highest levels of that organization have ventured out on study missions (Wen Jiabo to Guangdong; Hu jintao to Shandong; Xi jinping, just about everywhere else) in preparation for an under-reported emergency meeting – this week – on the Chinese economy. Statistics aside, I have to imagine that the body’s members are hearing the same things that many reporters and businessmen are hearing: that S. China factories are closing at an unprecedented rate, that building projects on the East Coast are stalling or stopping mid-girder due to tightened credit, that the Shanghai Composite Index has given up several years worth of gains, that property markets are stalling our or declining, and that somebody planned a month-long event in August that will shut down many of North China’s biggest factories for six to eight weeks (without compensation to furloughed employees).

There have been various efforts to disentangle the how and why of China’s GDP and growth numbers over the last half-decade (for a recent, reported example, see the Economist, here). Perhaps the most notable was a derailed effort to implement a Chinese-formulated “Green GDP” that would have accounted for the environmental costs of growth. Regardless of the Green GDP’s merits (Nature published a reasonable paper doubting those merits), there’s little doubt that the opposition focused on the political and psychological damage that might be incurred by reining in growth numbers that have become a point of national pride.

2 comments

  1. Can I ask if you’ve heard of anything about a self-imposed ban on food exports prior to the Olympics? The idea being to avoid other food scandals prior to or during the Games. I’ve seen references to export approval being very difficult or impossible to obtain in Jiangsu, Zhejiang, Fujian, Qingdao and Dalian.

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