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Naming and Shaming: China’s Stats Bureau Finds Its Voice

China’s national statistics bureau is sick of being lied to, and it’s not going to take it anymore.

On Thursday, the National Bureau of Statistics of China posted a statement on its website saying Luliang County in Yunnan province had hugely inflated its industrial output figures and fixed-asset investment.

According to the statement, after a spot check of 25 industrial firms in the county, the stats bureau found that the local government had submitted data showing the companies’ output for the first six months of the year was 2.74 billion yuan, 2 ½ times larger than its actual size. A check of the 2012 numbers of 28 firms found that the 6.34 billion yuan worth of output the county reported for the year was 2.2 times larger than reality. And a survey of 13 investment projects found that of the 210 million yuan worth of completed investment reported by the local government, only 20 million yuan was real.

It’s the second time in recent months that the agency has outed a county government for having fudged the numbers. In June, it publicized the transgressions of Henglan, a town in Guangdong province, which inflated 2012 output by four times the actual figure.

The problem is clearly more widely spread than two locations. After launching a review into how it collects data from companies around the country – a process that involves companies submitting information online – the bureau found that a number of local governments were circumventing what was supposed to be an independent process.

“Some governments compile fake corporate data themselves, some ask companies to submit fake data, some fill in the data on behalf of the companies,” bureau chief Ma Jiantang said in a statement in late June. “This sort of behavior…prejudices efforts to raise the authenticity of statistics.”

According to Thursday’s statement, starting last year the local government in Luliang – which lies east of the provincial capital Kunming – had “seriously influenced companies’ ability to independently submit data.” It also said some projects that haven’t even started were added into the completed investment figures, and that the size of other projects were inflated on paper.

A government agency like the statistics bureau – whose sole purpose is to collect economic data – doesn’t have a lot of levers it can pull to ensure compliance, particularly when the people putting together the numbers may be facing pressure from local leaders wanting to show more robust growth to burnish their own prestige and promotion prospects.

Moreover, local governments lying to Beijing is a time-honored tradition. In recent years, annual economic growth rates recorded by the provinces have collectively far exceeded what Beijing calculates as the national pace of growth.

That leaves naming and shaming as perhaps the best option open to Beijing’s number crunchers. Whether it manages to effect real change remains to be seen, but without greater faith in the data coming from China’s provinces, it’s difficult to know just how much faith to put in the national economy’s nascent rebound.

– Dinny McMahon. Follow him on Twitter @Dinny_McMahon

Correction: The Statistics Bureau found that the local government of Luliang County submitted data showing companies’ output for the first six months of the year was 2.74 billion yuan. An earlier version of this post listed the figure as 2.82 billion yuan.

http://blogs.wsj.com/chinarealtime/2013 ... its-voice/

China Export Growth Seen Halved in Fake-Data Crackdown: Economy

China’s crackdown on fake export invoices used to disguise money flows is probably cutting the nation’s trade figures, revealing subdued global demand that will weigh on economic growth.

Outbound shipments may have grown 7.1 percent in May from a year earlier, less than half the previous month’s reported 14.7 percent, based on the median estimate of 34 economists ahead of data due June 8. Import growth probably slowed to 6.9 percent from April’s 16.8 percent, a Bloomberg News survey showed.

Successful deterrence of fraudulent data through regulatory scrutiny of companies and banks would help restore trust in trade figures, while more accurate numbers may also highlight the urgency for Premier Li Keqiang to shift growth toward domestic consumption. Weakness in exports could also test Li’s reluctance to add stimulus to support the expansion of the world’s second-biggest economy.

The currency regulator said May 6 that it will send out warning notices to companies whose goods and capital flows don’t match as well as those bringing large amounts of cash into China. SAFE on May 22 told banks to improve checks of customer documents related to special trade zones amid speculation that the areas have been exploited to mask money inflows as exports.

Double-counting in the zones probably continued to inflate May’s figures, said Steve Wang, chief China economist in Hong Kong for Reorient Financial Markets Ltd., an investment bank backed by the Chinese government. While exports probably rose 9.3 percent in May, the true rate may be close to 4.6 percent excluding distortions from double-counting in the zones, Wang said.

http://www.businessweek.com/news/2013-0 ... -crackdown