A revelation this week from northeastern Liaoning province has demonstrated that China’s economic statistics might not be entirely on the up and up after all. Gasp!
Governor Chen Qiufa has admitted that from 2011 to 2014 the province’s GDP figures were artificially inflated, marking the first time that the Chinese government has admitted to falsifying economic data at any level.
During that period, Liaoning’s revenues were inflated by at least 20%, according to an investigation by the People’s Daily. As one example, a county near the provincial capital of Shenyang announced fiscal revenues of 2.4 billion yuan in 2013; however, after an audit, that figure was reduced to just 1.1 billion yuan. Rather than being an isolated incident, this was more of the norm.
For years, experts have looked at China’s economic statistics with a healthy dose of skepticism. The country’s GDP data tends to raise eyebrows the highest. In the third quarter of 2016, China’s GDP grew by 6.7%, the exact same percentage that it had in the previous two quarters as well.
Meanwhile, Liaoning was the only province to fall into a recession in 2016 — after it said it had stopped falsifying data. The province’s GDP actually slid downward by 2.2%in the first three quarters as steel production stagnated. Sometimes, honesty hurts.
Feng Liguo, an expert at China Enterprise Confederation, believes that creative accounting measures are not confined to Liaoning province.
“It’s not only happening in Liaoning, but other provinces as well, as local governments are under pressure to show positive GDP figures,” Feng told the Global Times. “Those figures are part of their evaluation KPI system.”
Will Liaoning’s coming forward help open the way for more provinces to admit to their exaggerations and create a new, more open era in Chinese goverance? We look forward to the next quarterly report to find out!
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