China has soared almost to the top of the world’s economic league tables, but whether the official data underpinning its status can be trusted is a constant headache, analysts say.
Simmering unease regarding China’s economic figures has taken on new meaning in recent months with discrepancies in some statistics and questions over just how much gross domestic product is really growing.
Earlier this year, economists took issue with Chinese monthly trade statistics, which diverged wildly from expectations, and two weeks ago official and private purchasing managers surveys — a key measure of manufacturing — surprisingly pointed in opposite directions.
Doubts have also been raised about how inflation is calculated.
“If there was an index for suspicion about China’s official statistics, it would be off the charts, or to use the technical American term, ‘crazy bad’,” Standard Chartered economist Stephen Green wrote in a report.
No less an authority than China’s new premier Li Keqiang has expressed doubts on the issue.
Leaked US diplomatic cables show that as the top official in Liaoning province in 2007, he told the then US ambassador that some Chinese data was “man-made” and thus unreliable.
When evaluating the provincial economy, Li said he focused on only three figures — electricity consumption, rail cargo volume, and the amount of loans issued, according to a confidential memo released by the WikiLeaks website in late 2010.
“All other figures, especially GDP statistics, are ‘for reference only,’ he said smiling,” according to the cable.
China officially overtook Japan as the world’s second-largest economy in 2010, and analysts say it is only a matter of time before it knocks the United States off the pedestal it has held for more than a century.
But when that day finally comes, can the data be believed?
Michael Pettis, a finance professor at Peking University and a senior associate at the US-based Carnegie Endowment, said that among China economists, “no one” found Li’s purported comments surprising.
“I mean, we’ve been told this many, many, many times by government officials,” he told AFP.
“There’s a lot of problems in China. One is that there’s a perception that the numbers have political incentives embedded in them.”
China calculates monthly and annual data far more quickly than France, a much smaller economy believed to have much higher quality data, he noted.