[vacets-gen] [Lies, damn lies and Chinese statistics]

Fri Oct 22 09:59:36 PDT 2004

http://www.atimes.com     China 
Lies, damn lies and Chinese statistics
By Florence Chan

HONG KONG - In China, one's political career is always pegged to his or her performance, which is mostly assessed by the growth of gross domestic product (GDP) within the person's jurisdiction. To win promotion, local authorities are tempted to doctor local GDP figures. Though Beijing has made it clear that development should be sustainable and scientific, governments at local levels still engage in a GDP growth race that seems unlikely to slow significantly until the 17th Chinese Communist Party National Congress in 2007, which might witness some important reshuffles.

According to the National Bureau of Statistics, the national GDP registered 5.877 trillion yuan (US$708 billion) in the first six months of 2004, and a year-on-year growth of 9.7%. Theoretically, these data must cover China's 23 provinces, five autonomous prefectures and four provincial-level municipalities. However, if one adds up the interim GDP results released by all these 32 local governments, one gets 7.027 trillion yuan, and an average growth of 13.4%. That's just how exaggerated the reports by local governments can be. 

The state statistical system of China is divided into five grades ranging from village through county, city, province, up to the central government. As a rule, the first grade hands in the data to the second, then the second to the third, and so forth. The fact is, secretaries of villages located in the same area find out from one another the GDP data they are going to report. To work things right, the figures must not be too good or too bad, for it would incur either jealousy or contempt. Likewise, the data are "adjusted" along the other grades as well, exaggerating the inaccuracy. 

Well aware of this inherent inaccuracy, the central government reads local GDP reports for reference only. "As everybody knows, local statistics in China are suspect. If the central government sets the GDP growth target at 8%, the provincial governments will report 9% growth and the counties 10-12%. So the central government, as a general rule, takes 2 percentage points off the local data to arrive at the final result," said Cao Yushu, chief of the policy research office under the National Development and Reform Commission. 

The nationwide statistical growth race is far too evident between regions of similar economic strength and political importance. Take two municipalities for example: Beijing declared that its 2004 interim GDP increased by 15.4% year-on-year, while the adjacent Tianjin city quoted 15.9%. Given that the former is preparing itself for the 2008 Olympic Games, its rapid GDP growth is understandable, but no one has any clue as to why Tianjin is growing even faster. 

Guangdong province tops the GDP list for the first half of 2004, followed by Shandong, Jiangsu and Zhejiang provinces - with year-on-year growth rates of 15.1%, 15.2%, 15.1% and 15.5%, respectively. The four are not only equal in economic strength, but are also in close geographical proximity - which might explain the similarity in the economic figures. Shandong, Jiangsu and Zhejiang are immediate neighbors along the eastern coastline. Again, the Tibet Autonomous Region ranks last on the list, with a healthy GDP growth of 11.9%, only behind the Qinghai Autonomous Region and Ningxia Autonomous Region, both recording 12% growth. 

Apart from overstatement, the GDP rocket is to a large extent fueled by costly but unproductive window-dressing projects throughout the country. Wang Huaizhong is a case in point. As mayor of Anhui province's Fuyang city, he successfully lobbied for a local airport that was started in 1995 and completed three years later, costing 320 million yuan. Though the airport mostly lies idle but demands substantial maintenance coupled with staff salaries from the Fuyang government, it still helped Wang climb up to the post of vice governor of Anhui. The airport, which recorded only 920 passengers in 2002, has become a financial burden, dragging the local government down into a debt of more than 2 billion yuan, almost five times its revenue. But Wang's Anhui reported an average annual GDP increase of 22%. He was, however, deposed for exaggeration before he was convicted of corruption and executed this month, as an example to ambitious party bureaucrats. 

Another perfect example of window-dressing would be the airport of Zhuhai city, which cost close to 5 billion yuan. Although its passenger and freight traffic in an entire year is less than what the Hong Kong airport gets in five minutes, it is included into Zhuhai's GDP calculation. 

Liu Junning, a respected scholar, published a commentary in the Hong Kong press pointing out that officials in developed areas win promotion easily while those in undeveloped areas do not. This is the root cause of the irrational investments that plague the Chinese economy. China's GDP has shown manifold increases in the past 50 years, but the resource consumption has simultaneously surged 40 times. An investment increment of 5-7% generates a GDP growth of merely 1%. This is the reason moderate reformist Premier Wen Jiabao set forth a macro-control policy last year aimed at cooling down the red-hot economy, with the focus on slashing flashing and extravagant but unnecessary window-dressing projects. Since the macro-control policies began to take effect last April, fixed-assets investment began to cool down and the white elephant construction hysteria has been curbed to some extent. 

The growth rate of national permanent assets investment logged 53% in January but dropped to 31% in June. Nationwide, Beijing has witnessed the biggest slump as its growth rate. It reached a prodigious 53% in January, but fell to a huge 31% in March and a very high 18% in June. It is evidently paying heed to its mayor's call for a relatively frugal Olympics in 2008. 

However, statistics indicate a serious regional imbalance between eastern and western provinces in terms of adherence to the cooling-down policy. From January to June, the developed and better-off east pumped 1,260 trillion yuan into fixed assets investment while the west only pooled 884.3 billion yuan for infrastructure construction. Hebei province in the east logged an increase of 38% in permanent assets investment, the highest in the first six months of 2004. It was followed by Fujian at 36% and Zhejiang at 34% - all above the national average of 31%. 

On March 1, Vice President Zeng Qinghong attended the 2004 spring semester inaugural ceremony of the central party school, where principal communist leaders are selected, educated and groomed. There, he called for sustainable development, scientific personnel selection and efficient administrative governance. If the graduates do not heed his call and correct their attitudes, then China is in for more lies, damn lies and local statistics. Evidently, there are still plenty of party officials who will advance their careers by advancing the GDP. 

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You shall know the truth and the truth shall set you free.

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