When 2+2=10

Here’s some ‘mathematics with Chinese characteristics’ for you from South China Morning Post.

The credibility of the mainland’s provincial GDP growth figures has come under scrutiny again after more than half of its provinces reported double-digit growth in the first three quarters of the year – a stark contrast to the national figure of 7.7 per cent.

The National Bureau of Statistics reported last week that the mainland’s gross domestic product grew by 7.7 per cent in the first nine months of the year and was well on the way to realising the 8 per cent benchmark considered by many analysts to be the rate required to create enough jobs to keep the social and economic situation stable.

That rate of national GDP growth is eye-catching in a global context, with many developed countries’ economies having stagnated or even shrunk since the global financial crisis hit in September last year. But it could only be called “moderate” when compared with the numbers reported by provincial governments.

Of the 31 provinces, autonomous regions and municipalities, only Shanxi , Shanghai and Xinjiang reported lower growth than the national number.

Led by the Inner Mongolia Autonomous Region’s 16.9 per cent, 18 provincial-level jurisdictions reported double-digit growth in the first three quarters of the year. The overall GDP number reported by all provinces was 2.5 trillion yuan (HK$2.84 trillion) higher than the 21.78 trillion yuan national figure announced by the bureau.

To put that into perspective, Jiangsu , one of the richest provinces, reported GDP of just 2.39 trillion yuan in the first three quarters.

The discrepancy might have been larger if not for the bureau’s intervention. At a national statistics meeting on October 19 in Wuhan , bureau officials ordered half the provinces to cut their GDP numbers because “some of them were artificially high”, according to the National Business Daily.

The regional GDP total often surpasses the national one because the mainland’s statistical system allows the central and provincial-level governments to collect data independently. With little direct intervention or supervision from the central government, regional administrations tend to report much higher GDP figures to impress their superiors.

In 2004, the GDP figures reported by provincial governments exceeded the bureau’s national figure by 19.4 per cent, a mismatch that triggered a central government investigation. Provincial governments had, since then, managed to limit the gap to less than 10 per cent – until this year.

Bureau chief Ma Jiantang expressed frustration at regional governments’ inability to report accurate numbers, saying provincial GDP was “injected with extra water”. (Note: Injecting meat and fruit with water to make it heavier is common practice in the Chinese ‘food’ industry)

Zhou Dunren , an economics professor at Fudan University in Shanghai, said it was the worst-kept secret on the mainland that regional governments had reported artificially high GDP figures to impress their bosses in the past, but the central government had never seriously addressed the problem.

“If nobody ever gets seriously punished for writing up their GDP figures, there is no way provincial governments will count their numbers honestly. In China, GDP is somehow still the No 1 odometer to gauge officials’ job performances.”

Zhou suggested the mainland shift its focus from concentrating on the quantity of GDP to the quality of GDP, a change that would provide regional governments with less incentive to artificially inflate GDP numbers.

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About Stranded Mariner

Marine Engineer and passionate sailor and cruiser, working in the marine business in China.
This entry was posted in China, Cluster fucks, Economy, News and Opinion. Bookmark the permalink.

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