China’s economic growth statistics may finally add up, in 2019

For local officials in China’s provinces keen to boost their chances of promotion, the days of being able to puff up the output data they send to Beijing may be coming to an end.

Fifteen years ago, if you added up the gross domestic product of all China’s 31 provinces, you’d get a number more than 10 per cent larger than the official national total. By around 2019, the country will “nearly eliminate” that gap, according to Sheng Laiyun, chief economist of the National Bureau of Statistics.

The authorities are shifting to the latest United Nations-based statistical standard, gathering more comprehensive data from a major census next year, and cutting local interference and double accounting by computing GDP for the provinces instead of relying on their own reports, Sheng said in an interview in Beijing. Output reported by 31 provinces last year totalled a mere 3.7 per cent more than the statistics bureau’s figure for national GDP.

If it’s convincing, a reform that closes the gap would be a major win in China’s battle against flawed or fake economic data, which has fed scepticism from investors wanting to be able to trust what they read about the world’s second-largest economy. It would also be a triumph for the country’s economic chiefs, such as Premier Li Keqiang, who once complained that some statistics were “man-made.”

“China is cleaning up the environment for statistical work and ensuring that there’s no interference by officials,” Sheng said.

Beyond statistical rigour, China has also shifted the incentives. Pure economic output has become less important for evaluating local party officials’ performance, and punishments for fraud have been increased.

After Liaoning province admitted this year that it faked fiscal data, President Xi Jinping said in March that officials must be “frank and forthright” when delivering their reports.