Treaty of Nanking

GDP figures boost case for reining in the economy

PUBLISHED : Wednesday, 09 August, 2006, 12:00am
UPDATED : Wednesday, 09 August, 2006, 12:00am

Double-digit growth is recorded across the country

Three quarters of the mainland's provinces recorded economic growth of at least 12 per cent in the first half of this year, exceeding the national average by more than a percentage point, the nation's top planner said.

The statistics bolster the case for the government to rein in an economy that appears to be racing out of control and once again raise questions about the accuracy of gross domestic product figures.

All 31 of the mainland's provinces, regions and municipalities registered double-digit growth in the first six months, while 23 reached 12 per cent or more, according to figures released by the National Development and Reform Commission late on Monday.

Inner Mongolia took the top spot with a whopping year-on-year growth rate of 18.2 per cent.

But the National Bureau of Statistics said last month that the mainland's economy grew 10.9 per cent year on year in the first half and 11.3 per cent year on year in the second quarter alone.

The government later followed that announcement by tightening credit, calling for administrative measures to curb investment and introducing policies to crack down on property speculation. In a front-page commentary yesterday, the People's Daily Communist Party mouthpiece urged provinces to implement central government policies aimed at cooling the economy.

Analysts said the gap between the national average and provincial GDP figures was a common occurrence, driven by the tendencies of local officials to inflate growth to reflect positively on their performances.

'You have all these new ideas about sustainable development, energy conservation and cooling down investment growth, but if the forms on which each local cadre is assessed don't reflect those things, then obviously the real incentives haven't changed,' said Stephen Green, a senior economist at Standard Chartered Bank in Shanghai.

However, this latest set of figures could also be an indication that the economy is growing more rapidly than the central government would care to admit, perhaps more accurately reflecting what is really happening in the provinces.

Mr Green estimated the mainland's economic growth was actually running at about 12 to 13 per cent. 'Like many economists, I think the national numbers are understating growth,' he said.

The statistics bureau has sought to make its figures more accurate, especially under the leadership of Qiu Xiaohua , by sending inspection teams out to the provinces and reviewing local data.

The commission did not give figures for all the provinces for the first half, only the top 10 fastest growing. Also excluded were Taiwan, Hong Kong and Macau.

Besides Inner Mongolia, the top five included Jiangsu province with growth of 15.4 per cent, Shandong province at 15.3 per cent, and Tianjin municipality and Guangdong province tied at 14.4 per cent.

The commission also gave a breakdown by region, carving the country into west, northeast, central and east. All four regions grew by more than 12 per cent year on year in the first half, with the booming east - predictably - growing the fastest at 14.2 per cent.

The eastern region, home to much of the export industry and main centres of foreign investment, took six spots among the top 10 fastest-growing areas.