The Simplest Solution: Assume Chinese Data Are Misleading

• Activity Number: 9
• Type: Invited
• Date/Time: Sunday, August 4, 2013 : 2:00 PM to 3:50 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Derek Michael Scissors*+
• Companies: The Heritage Foundation
• Keywords: independent ; incompatible ; strategic

Abstract

China's growing economic importance has led to assumptions of convenience. It is often assumed that Chinese statistics are acceptable, or at least improving. The latter is certainly true compared to 1975, it's not certainly true compared to 2005.

New premier Li Keqiang has been cited as dismissing China's official statistics. The State Statistical Bureau is required to praise the government when releasing data, yet is still more reliable than provincial and county government reporting, where a deteriorating economy can end careers.

Economic surveys are finished impossibly quickly. China consciously reports a narrow unemployment rate rather than a comprehensive one. Monthly GDP components are acknowledged to be incompatible with annual. Raw coal production stopped being published when it became internationally embarrassing. Independent reports on banking quality are harshly discouraged.

Alternatives are spotty. Independent surveys would be ideal but are technically illegal. Indirect measurements using trade and other externally audited data are necessarily incomplete. The government behaves strategically - altering series in response to outside attention. It's propaganda first.