Improved statistics will make a difference
China's economic statistics in recent years have become a favourite subject of armchair economists. Almost every time they are released, discussion is generated in offices throughout the world about their accuracy. Conclusions - or at least perceptions - tend to be negative. But that may be about to change; the State Statistical Bureau has decided to bring its methodology more in line with international standards. This is good news.
Better-informed analysts might ask why China's gross domestic product figures generate such intense media attention internationally. They are, after all, only meant to be a guide to how much the country is producing. They are not the kind of figures upon which international investors will stake their fortunes. A fund manager, for instance, will look at numbers on a microeconomic scale to make a decision on whether to buy the stocks of publicly listed companies with operations on the mainland. Even the CEO of a multinational company wanting to build a factory on the mainland will conduct much more detailed analysis than merely looking at GDP figures. This is the reason why, sorry to say, stock pickers and lawyers are paid a lot more money than economists.
The GDP figures are nonetheless important in building and maintaining confidence among the international business community. For anyone with a stake in the mainland economy, they provide either an anchor of reassurance or advance warning of the need for contingency planning. Therefore, although the gathering and sorting of statistics is by no means a perfect science, the more China's methodology can be modelled on international standards, the better.
To be fair, the basic nature of the system has needed little adjustment. The State Statistical Bureau has long been using a method known as statistical sampling, which focuses on the change within certain variables that represent a broad spectrum of economic activity. This method is different to that used by provincial and local authorities, which still cling to Soviet-style measurements of total output, dutifully reported by producers. But what has needed tweaking is the choice and refinement of those variables. As the mainland has moved so rapidly from central planning to a market-based economy, the 'samples' used have often been changing in relative value faster than officials would like to keep up with. For instance, the GDP figures will now include sales of retail services, not just merchandise as they did previously.
The bureau has been improving in other areas too, such as clamping down on deliberately inaccurate reporting by provincial and local officials: between May and October last year, it meted out punishment in nearly 19,000 cases.
There is still plenty of room for improvement. For instance, the bureau releases its figures to two commercial entities under its control, from which the data must be purchased. Sometimes they choose to make their services available at erratic times. A firm schedule would be welcomed. Foreign trade figures, meanwhile, are not released directly to foreign media, nor are foreign investment figures. They must rely on state media, such as Xinhua or China Central Television, which are prone to mistakes in the placement of decimal points. Finally, holding more briefings for reporters and analysts, or making spokesmen available by phone on the day figures are released, would be appreciated.
Still, progress has been steady and sure, and every step towards international standards is encouraging. As the Chinese leadership's drive for greater transparency and accountability continues, having more reliable statistics available on which to judge their progress is vital.