Magical maths key to China’s quest for double-digit growth
Don’t like the GDP figures you’re seeing? Look beyond the national totals and compute locally
China is targeting growth of 6.5 to 7 per cent this year, despite challenging conditions at home and abroad ... “I believe we have the capability to achieve this,” Xu Shaoshi, chairman of the National Development and Reform Commission, said.
SCMP, February 4
You indeed have this capability, Mr Xu. In fact, I can restore the national growth rate to double-digit figures overnight. Just read on and I shall show you how.
Every year the provinces report their gross domestic product figures a month or so after the national figure is announced and every year again the total of the provincial GDP figures is higher than the national. It was a combined 72.5 trillion yuan for the provinces in 2015 as opposed to a national 67.6 trillion yuan.
As the first chart shows, the provinces also report higher real growth rates. On a weighted average basis it was 7.73 per cent for 2015 as opposed to the national 6.9 per cent. This 0.83 per cent growth premium was actually on the low side. The 10-year average is about 1.8 per cent over the national figure.
Thus we can start on our course to double-digit growth rates by no longer calculating GDP at the national level. Far better results are achievable by doing so at the provincial level and adding them all up.
But we can do even better than this. GDP in the mainland is also calculated at the prefecture level. When you calculate the weighted GDP growth rates of, for instance, Guangdong province, you find, as the second chart shows, that once again the sum of the parts is greater than the whole. The prefectures outperformed the province by an average of 1.5 per cent over the last ten years.
A quick eyeballing of the figures tells me that Guangdong is not unique. Prefectures do better than their provinces almost everywhere.
So add it all up. If we get 6.8 per cent growth at the national level this year, we can boost it to 8.6 per cent by counting at the provincial level. If we ignore the provincial as well as the national and count only at the prefecture level we can raise it another 1.5 to 10.1 per cent.
There you go. Double-digit growth just like that. And if 10.1 is too slim a margin of double-digit territory, I recommend going another step down and calculating GDP at the individual street level. That should be good enough for at least another 1 per cent boost.
There were some other gems as well in the latest GDP figures. Hebei province reported 1.3 per cent nominal growth but 6.8 per cent real growth. Oh, those poor Hebei-ans, suffering from such very, very deep deflation.
And Gansu province actually showed a slight decline in nominal GDP. Gansu’s solution: Don’t report a growth figure. Just hold off until it all blows over.
My solution: Adopt the Hebei option. Complain of an even deeper deflation. That way Gansu’s problems are over immediately and the provincial governor keeps his job. So easy.
I think this coming year is likely to see more of mainland statisticians looking at truth as a commodity rather than a virtue.