China's Problem with its Statistics.
The Chinese Communist Party (CCP) has long had a statistics problem—the numbers from different sources inside China don’t always add up. The Party has sought to address this with a newly revised Statistics Law, which was signed by Hu Jintao on June 27 and will take effect in 2010.
The statistical data released by the regime have been subjected to more and more scrutiny in the past several years. Especially since the Chinese economy started to slow down in 2008. Both domestic and international scholars have been questioning several key economic figures released by the CCP’s National Bureau of Statistics (NBS) and other state offices.
For example, the International Energy Agency (IEA) recently pointed out an unexplainable inconsistency between China’s declining oil and electricity consumption and the reported growth of 6.1 percent in its first quarter GDP.
The contradiction in the numbers casts doubt on the fast paced recovery the regime has claimed for China’s economy.
Both the NBS officials’ prompt rebuttal and a quick freeze by China's Association of Electricity Generators on publishing consumption data only served to intensify the discussion on how trustworthy China’s statistical data are.
Inconsistent statistics and conflicting data regarding other key economic figures, such as the unemployment rate, average income, and number of house sales, have again and again put the CCP regime in a similar embarrassing position in the past several months.
All of these highlighted for the regime the urgent need to revise the 26-year-old Statistics Law.
Consistency, Accuracy, and Propaganda
Facing an increasingly complex economy, the members of the CCP regime have mixed feelings about statistics. On the one hand, the CCP central authorities wish they could have a set of trustworthy statistics, which would give them better control over China. On the other hand, they want to keep using statistics, along with the state-run media, to provide a rosy picture of China’s development, spurring domestic consumption and luring international investment.
Unfortunately, in many cases these two functions of statistics conflict with each other. Different statistical datasets were released by different governmental branches for different purposes. Some datasets put more emphasis on statistics’ first function as social activity indicators, while the others put more emphasis on statistics’ second function as propaganda tools.
This discrepancy has given external economists the chance to highlight the inconsistencies between the datasets released by the CCP regime.
Poisonous Culture
An experienced accountant in China said that almost all the companies who interviewed her asked her technical questions explicitly testing how well she could seamlessly falsify the account records to fool an official inspection. Even the regime publicly admits that 68 percent of the large, state-owned corporations have serious accounting errors. Nobody has bothered to find out what the corresponding percentages are among the small private companies.
With this quality of data as the inputs for China’s statistical system, a measure of cynicism is justified regarding the efforts through this new legislation to ensure consistency in statistical reporting. The first law taught in statistics is “garbage in, garbage out.”
The Chinese Communist Party (CCP) has long had a statistics problem—the numbers from different sources inside China don’t always add up. The Party has sought to address this with a newly revised Statistics Law, which was signed by Hu Jintao on June 27 and will take effect in 2010.
The statistical data released by the regime have been subjected to more and more scrutiny in the past several years. Especially since the Chinese economy started to slow down in 2008. Both domestic and international scholars have been questioning several key economic figures released by the CCP’s National Bureau of Statistics (NBS) and other state offices.
For example, the International Energy Agency (IEA) recently pointed out an unexplainable inconsistency between China’s declining oil and electricity consumption and the reported growth of 6.1 percent in its first quarter GDP.
The contradiction in the numbers casts doubt on the fast paced recovery the regime has claimed for China’s economy.
Both the NBS officials’ prompt rebuttal and a quick freeze by China's Association of Electricity Generators on publishing consumption data only served to intensify the discussion on how trustworthy China’s statistical data are.
Inconsistent statistics and conflicting data regarding other key economic figures, such as the unemployment rate, average income, and number of house sales, have again and again put the CCP regime in a similar embarrassing position in the past several months.
All of these highlighted for the regime the urgent need to revise the 26-year-old Statistics Law.
Consistency, Accuracy, and Propaganda
Facing an increasingly complex economy, the members of the CCP regime have mixed feelings about statistics. On the one hand, the CCP central authorities wish they could have a set of trustworthy statistics, which would give them better control over China. On the other hand, they want to keep using statistics, along with the state-run media, to provide a rosy picture of China’s development, spurring domestic consumption and luring international investment.
Unfortunately, in many cases these two functions of statistics conflict with each other. Different statistical datasets were released by different governmental branches for different purposes. Some datasets put more emphasis on statistics’ first function as social activity indicators, while the others put more emphasis on statistics’ second function as propaganda tools.
This discrepancy has given external economists the chance to highlight the inconsistencies between the datasets released by the CCP regime.
Poisonous Culture
An experienced accountant in China said that almost all the companies who interviewed her asked her technical questions explicitly testing how well she could seamlessly falsify the account records to fool an official inspection. Even the regime publicly admits that 68 percent of the large, state-owned corporations have serious accounting errors. Nobody has bothered to find out what the corresponding percentages are among the small private companies.
With this quality of data as the inputs for China’s statistical system, a measure of cynicism is justified regarding the efforts through this new legislation to ensure consistency in statistical reporting. The first law taught in statistics is “garbage in, garbage out.”
