Friday, November 21, 2003

So, it's official, the CHinese have formally admitted that they have bad economic data. I added my two cent, and the original article follows:

Yes, I read that article as well, but I have to say that things are improving. They have had to switch from the Soviet accounting system to a Western one, although it took them 20 years to do so. The task is still not completed yet. As for banking data, I think most of the big bank headquarters now report “truthful” figures in that they report what the branch banks report to them. Now, the branch banks are lying through their teeth, and several on the spot inspections have shown wide-spread false reporting. In my up-coming paper ( I will send to you guys once it is polished), my coauthor and I show that false reporting in profitability is especially rampant. I do think that the NBS people are trying to make things better by doing sample surveys.

Friday, November 21, 2003
Economic figures were flawed, top official says
ALLEN T. CHENG in Beijing

China's top statistician yesterday acknowledged for the first time that the government's economic estimates were flawed and that its research methods "did not always reflect the real situation".

Li Deshui, director of the National Bureau of Statistics, announced the government would implement a massive overhaul of the research methods used in its census and gross domestic product calculations.

"In the past we did not follow international standards and practices," said Mr Li. "Our research methods did not always reflect the real situation in China."

The reforms include standardising cyclical census studies for the economy from once every few years to every five years to correlate with the government's five-year plans. Each economic census - a wholesale study of the population broken down by economic sectors - will also include measures for the industrial, services, property and construction sectors. Such studies provide the database for GDP estimates.

In the past, the studies did not include all services or the construction and property sectors, instead focusing primarily on industrial growth.

Mr Li also announced that the bureau would begin following standard international practices of readjusting quarterly and annual GDP growth estimates once more complete data sets come in, even after they have been announced. "In our traditional thinking once we announce a growth rate, we thought it was embarrassing to change it," he said. "In other words we never had a systematic way of adjusting our GDP and growth estimates once they were released."

The changes will take effect in January. "So in the future when you journalists see us adjusting past GDP estimates, don't get mad at us. This is more in line with international practices and actually shows we in China are becoming more transparent and accurate with our economic estimates."

Top US economists, including Harvard professor Thomas Rawski, have long argued that China's statistical gathering process needed an overhaul. In a major study released last year, Professor Rawski caused a storm in Beijing when he questioned the authenticity of Chinese statistics.

Mr Li maintained that the reforms did not mean that the nation's past economic measures were "way off the mark".

However, his announcement does bring into question how much China's official growth rates for the past 20 years will change once the new methodology begins next year. Official statistics indicate the nation grew at more than 9 per cent a year since market opening reforms began in 1978, one of the key reasons foreign investors continue to pump billions of dollars into the mainland.

"I can say with confidence that no nation has a 100 per cent perfect statistical gathering system," he said in defence.

"We in China have reformed from a planned economy to that of a market economy and the adjustments take time. We can say with certainty that our past statistics and growth estimates - though not completely accurate - showed a general trend."

Comments: Post a Comment

This page is powered by Blogger. Isn't yours?