China's official statistics getting more suspect

The Hong Kong daily South China Morning Post (SCMP) last week reported potential new cases of anomalous statistical reporting by Chinese officials. The SCMP article found evidence to question recently published data from the China National Bureau of Statistics (NBS) on the profitability of large industrial firms, retail sales, electricity consumption and coal output. SCMP reporters assert that officially reported July industrial profit growth was seriously overstated compared with growth figures calculated from absolute yuan figures. The NBS explained that the difference reflects annual changes in the size of the corporate sample. The NBS sample is limited to firms with revenues above 20 million yuan. Some experts interviewed think that the NBS may, for example, deliberately adjust the sample size to make the numbers look better and meet official growth targets.

Last month, Chinese media reported that the housing expenditure component of the consumer price index failed to reflect actual trends in housing costs.

The poor reliability of official Chinese figures has been discussed for years, but in recent years the problem seems to have grown worse. The remarkable stability of reported GDP growth figures is not credible. Moreover, it has been found that, for example, in the Liaoning and Inner Mongolia provinces and Tianjin's Binhai special zone official data have been significantly manipulated. Many suspect part of the statistical reporting problem is related to the China's ambitious official target of doubling real 2010 GDP by 2020. The goal may have forced officials to cheat in meeting their mandated targets.

Data discrepancies are always problematic. They can distort assessments of the economic situation leading to inappropriate economic policies and bad business decisions.