China economy

Another Chinese city admits releasing ‘fake’ economic data

Baotou is the latest provincial and local government in China to come clean on overstating its economic performance and revenue in official figures

PUBLISHED : Wednesday, 17 January, 2018, 2:17pm
UPDATED : Wednesday, 17 January, 2018, 10:38pm

A northern industrial city in China said its fiscal revenue last year was significantly less than it had earlier estimated partly due to “fake” additions, making a revision just days after reports of similar incidents fuelled scepticism over official data.

Baotou in China’s Inner Mongolia autonomous region revised its estimated fiscal revenue in 2017 lower by nearly 50 per cent in an annual work report, a copy of which was published on the Baotou government’s website on January 13.

The Baotou city government said in the report that the revision was due to factors including “fake additions”. It did not say how the additions came about or who was responsible.

Days earlier, the governments of Inner Mongolia and Tianjin, a large port city in northern China, said their fiscal and economic numbers for 2016 had been overstated.

“We have been trying to change our mindset and change the course of our development model,” the Baotou government said, while pledging to tame government borrowings in part by halting debt-burdened public projects.

Why Chinese officials are suddenly coming clean over cooking the books

Baotou was forced to halt an ambitious subway construction project earlier last year as the central government questioned its ability to finance the debt.

Inner Mongolia cut its industrial output figure for 2016 by 40 per cent, according to the official Xinhua news agency on January 3. It also said fiscal revenue for that year ought to be 26 per cent less than initially stated. It did not give details.

The 2016 gross domestic product of Tianjin’s Binhai New Area – an economic zone once touted to become China’s Manhattan – was actually about a third smaller than previously announced, according to a commentary in the official People’s Daily on January 15.

The incidents of data fraud coincided with a campaign led by Beijing to crackdown on risky lending, aimed partly at curbing runaway local government debt.

The People’s Daily said that while inflated data may look good on paper, it would lead to more stress in the less developed hinterland as it would cause the central government to reduce funding.

In January last year, the northeastern province of Liaoning said it had faked fiscal data from 2011 to 2014, becoming the first province to make such an admission.

Chinese provinces and cities have long been suspected of cooking up numbers, with the focus on local government officials, whose performance are often assessed based on how well their respective economies have performed.

Why Xi Jinping is taking a longer view on the economy

China’s top leaders signalled a shift in priority as the country strives for development to be more quality driven. In an agenda-setting Communist Party congress in October, President Xi Jinping said China has now entered a “new era” where the country will prize quality growth over quantity.

China is set to release its 2017 GDP data on Thursday. Premier Li Keqiang has signalled that GDP growth should be about 6.9 per cent, accelerating from a 26-year low of 6.7 per cent in 2016.