China’s official figures: lies, damned lies or just changing statistical methods?

The reliability of official Chinese statistics has once again been brought into question after the government released seemingly conflicting numbers for energy use in the agricultural sector.

In figures published on Friday, the National Energy Administration said the country’s primary industry (the official term for the agriculture sector) used 6.5 billion kilowatt-hours of electricity in June, an increase of 6.6 per cent from the same month of 2017.

The problem, however, is that 12 months ago, the same agency said the agriculture sector used 12 billion kWh of electricity in June. If that were the case, this year’s figure would represent a drop of about 46 per cent.

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Economists were quick to air their annoyance at the apparent miscalculation.

“Has the statistical approach changed?” Li Xunlei, chief economist at Zhongtai Securities, wrote in a note, adding that it was “really not easy to do research” with the government applying such liquidity to its calculation methods.

The energy agency explained the discrepancy by saying it had adjusted its definition of the agriculture sector – to exclude some support services – which had resulted in the lower figure.

That failed to appease the industry watchers, however.

Economist Ma Guangyuan said on Weibo, China’s Twitter-like microblogging service, that by changing its calculation methods without warning, the government was making it difficult for economists and analysts not only to do their work but also to trust the data.

“The new methodology is so magical it can transform a sharp drop to an increase,” he said.

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The irony of the perceived miscalculation is that for many years, electricity consumption has been regarded as one of the few truly reliable measures of the country’s economic performance.

In 2007, when working as party chief of the industrial province of Liaoning, China’s now Premier Li Keqiang described official GDP figures as “man-made” and not trustworthy.

According to US diplomatic cables released by WikiLeaks in 2010, he said that when he was boss of Liaoning he instead looked at railway freight volume, bank loans and electricity consumption to measure the economy. In response to that revelation, The Economist magazine compiled a “Li Keqiang index” – based on those three indicators – which is still used by some investors to keep tabs on the Chinese economy.

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The adjusted electricity figures are not the first official numbers to have been questioned recently.

Last month the National Bureau of Statistics announced that Chinese industrial companies with “scaled production” booked a combined profit of 2.7 trillion yuan (US$402.85 billion) in the January-May period, up 16.5 per cent from the same period of 2017.

Yet this time last year it said the same companies reported a combined profit of 2.9 trillion yuan for the period, which means this year’s number would represent a drop of almost 7 per cent.

The bureau said the confusion was caused by a revision to the sample it used to calculate the figures, adding that its method of excluding companies with an annual turnover of less than 20 million yuan had been in place for 20 years.

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While Chinese government agencies have promised more transparency in their operations, official figures have long been criticised for their perceived lack of reliability.

The nation’s headline economic growth figure, for instance, has not moved outside the narrow range of 6.7 to 6.9 per cent for the past 12 quarters in a row.

Meanwhile, several provincial and city governments, including Tianjin, Inner Mongolia and Liaoning, have admitted cooking their books.