Are Chinese economic statistics reliable? | China Unlocked

Chinese Stock Market - Arrow Graph Going Down on Red Chinese Flag

By Luo Jie, Dai Yue

On March 2, 2017, at the first press conference of the Fifth Session of the 12th CPPCC National Committee, when answering questions from the media about China’s economic growth, spokesman Wang Guoqing said, “China’s gross national product in 2016 exceeded RMB70 trillion, an increase of 6.7% over the previous year.” He stressed that this figure is authentic and credible.

There are reasons for Wang’s stress. For some time, foreign countries have had doubts about the authenticity of China’s economic data. Facing such doubts, Chinese economic experts have pointed out that compiling economic statistics is complicated work, especially in China, a country with 1.3 billion people. Statistical methods, special national conditions, difficulties in surveys and other factors often make China’s economic data a puzzle to foreign countries, resulting in misunderstandings. Nevertheless, China’s statistics agencies are committed to improving the quality and credibility of economic data.

Statistical Methods

On the morning of March 5 the work report of the government showed that in 2016 China’s CPI (Consumer Price Index) rose by 2%, a moderate increase. This data puzzled some Chinese people. Taking housing prices in 2016 as an example, they believe that prices throughout the country have been rising, becoming a very heavy burden on the Chinese people.

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This is also shown in data from some economic institutions. In its 2016-2017 report on the national real estate market, the E-house China R&D Institute pointed out that from January to November 2016 the average house transaction price around China was RMB7,546 per square metre, a year-on-year increase of 10.6%, marking a seven-year peak.

Commenting on this, Wang Xiaolu, deputy director of the National Economic Research Institute of China Reform Foundation said, “Whenever there are fluctuations in economic data represented by the CPI, there will be such doubts. It is partly because of the statistical methods China currently uses.” He explained, “The methods of gathering China’s economic statistics are based on internationally accepted statistical rules. These rules are based on the economic structure of developed countries in Europe, and the United States, and sometimes can hardly reflect China’s unique economic model. That’s why the people distrust our economic data.”

Taking the CPI as an example, Wang pointed out: “Food takes up one third of China’s CPI; but with economic development, the Chinese people have bidden farewell to the era when food was the first necessity. However, housing, which is increasingly more important in their life, cannot be shown in the CPI. According to international statistical practices, housing price is generally not a CPI item, because economists around the world generally believe that residents buying housing is an example of investment behavior rather than consumer behavior.”

Wang also stressed: “The fact that housing price is not included in the CPI does not mean the government does not count it; it is another statistical item.”

Difficulties in Surveys

In addition to statistical methods, many economists also mention the basis of statistics – national surveys. Every year, China uses a great deal of human, financial and material resources to carry out various forms of surveys, including the national economic survey. At the end of 2014 China completed the latest national economic survey, which took more than two years and involved millions of investigators.

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“China uses a large number of social forces to carry out the national economic survey. But its large land area, frequent population flow and other factors make the statistical work extraordinarily difficult, which directly affects the final economic data,” said Zhang Liqun, an economist with the Development Research Center of the State Council.

Taking the employment figure as an example, Zhang pointed out: “Theoretically, a national survey is conducted on a door-to-door basis. But some migrant workers have no formal place of residence, often living in a working restaurant or a warehouse. Thus they may be left out during the survey. In addition, because of their relatively high mobility, it is difficult to figure out whether a migrant worker is among the permanent resident population if this migrant worker is not found. All these things affect the statistics.”

Reform

Although China faces a variety of subjective and objective difficulties in data gathering, Chinese economists acknowledge that the Chinese government has never wavered in its determination and efforts to improve the authenticity of its economic data.

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On October 11, 2016, China’s top leader Xi Jinping presided over the 28th meeting of the Central Leading Group for Comprehensively Continuing Reform, which deliberated and passed the Opinions on Continuing the Reform of the Statistical Management System to Improve the Authenticity of Statistical Data, and called for further improvement of statistical laws and regulations and the performance appraisal mechanism to strengthen supervision and accountability.

Previously, China’s statistical agencies had started the reform of statistical methods. On July 5, 2016, the National Bureau of Statistics (NBS) announced that it would reform the accounting methods for R&D expenditure in GDP, and stressed that it would keep following up developments and changes of international statistical standards, and further improve its statistical methods to reflect the economic development of China more authentically and more accurately.

On December 8, 2016, Ning Jizhe, commissioner of the NBS, published an article in the People’s Daily. He wrote: “The NBS is working hard to introduce the Regulations on the Implementation of the Statistics Law, study and make the Regulations on Managing Non-Governmental Statistics and Surveys, continue the amendment of local regulations on statistics, and accelerate the improvement of statistical regulations and normative documents, so as to make statistical surveys more standardized, and promote the sound development of the statistics industry.

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