Editorial | Welcome revision to fuzzy maths on China’s economic growth

The new year will see many challenges for China’s leaders, the chief of which is to boost economic recovery. At the centre of this development is the all-important figure for gross domestic product. Ironically, the nation’s GDP figures have long been a matter of dispute, with the accuracy of their calculations frequently challenged by domestic and overseas experts. It is therefore right for the central government to reform national economic statistics to boost their credibility.

One anomaly has been that the sum total of GDP figures from all the provinces frequently exceeds the national figure. This has led to cases in which local officials were punished for cooking the books. One incentive for faking the numbers has been that achieving economic targets helps with official promotions.

Even so, there have also been honest mistakes and disputed definitions. A major and rapid shift towards digital and service-oriented growth also means that significant growth in many sectors of the economy has been under-reported. To better capture the economic picture, the National Bureau of Statistics will implement new measures to unify standards and procedures for calculating national and regional GDP. In the past, provinces were allowed to calculate their own figures – giving officials the means and incentive to inflate growth. Even as some officials – such as several from Liaoning province and Inner Mongolia – were caught and tough penalties imposed, the problems persist because they are systemic.

Under the new system, the statistics bureau will be responsible for calculating figures at both the national and provincial levels. Past regional GDP figures would also be revised using the new method, the results of which will be published later this year. While there has no doubt been shenanigans committed, one should not underestimate the difficulty of capturing the general economic picture of a huge country and complex economy undergoing rapid technological changes. Even the most advanced Western economies sometimes have had to revise projections and calculations.

But, given the intense scrutiny of everything China, the central government must ensure confidence in the numbers, not only to entice foreign investors and satisfy transnational economic agencies, but also to be in a better position to determine economic policies and set viable goals. This move to unify and standardise procedures for GDP calculations is long overdue. In fact, it was first proposed as early as 2004, but did not become policy until 2017. Pilot programmes were successfully carried out using the new method in the provinces of Zhejiang, Hubei and Shaanxi. Now, bureau officials are confident about the new system for a nationwide roll-out. Unless the numbers all add up, Beijing will never be able to silence the doubters.