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Chinese provinces admit to faking economic data

Discussion in 'China & Asia Pacific' started by BMD, Feb 10, 2017.

  1. BMD

    BMD Lt. Colonel ELITE MEMBER

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    https://www.ft.com/content/b25d1b32-dd37-11e6-9d7c-be108f1c1dce

    China province admits falsifying fiscal data
    Liaoning’s ‘large-scale financial deception’ latest blow to country’s statistics credibility

    Trump backs ‘One China’ policy in call with Xi
    A worker uses a sledgehammer at a demolition site in Shenyang, Liaoning province © Reuters
    13Tom Hancock in Shanghai

    The Chinese province of Liaoning fabricated fiscal data for four years, a senior official has admitted, the latest blow to the already shaky reputation of China’s economic statistics.

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    Fiscal revenues in the province were inflated by at least 20 per cent from 2011 to 2014, said provincial governor Chen Qiufa, according to Communist party mouthpiece The People’s Daily. “Liaoning was involved in large-scale financial deception at city and county levels that lasted a long time and involved many people,” Mr Chen added.

    The falsification led to “additional taxes of Rmb1,000 ($146) per person in recent years”, the state-run China Daily said.

    The revelation comes after China’s top statistician Ning Jizhe acknowledged last month the falsification of economic data, admitting that “fraud and deception” had occurred and vowing to punish perpetrators.

    Economists and investors have long expressed doubts about Chinese economic data, particularly gross domestic product figures. Compared with other countries, China’s inflation-adjusted GDP growth rates are remarkably stable from quarter to quarter. The average of provincial GDP figures is often far in excess of the official national figure.

    When Premier Li Keqiang was the top official in Liaoning, he said GDP data were “man-made” and therefore unreliable. Some economists have compiled alternative indices based on his use of railway cargo volumes, electricity consumption and loans as a proxy for economic growth, although such measures are seen as relevant only to areas that rely on heavy industry.

    Following Mr Chen's admission, respected Chinese financial publication Caijing said it had already exposed Liaoning’s fake data in a 2015 report that referred to the region as “Province A”, presumably to avoid deletion by censors. That report dated the falsification of the data back to 2009, earlier than the 2011 date given by Mr Chen, who became provincial governor in 2015.

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    Liaoning, a province of about 40m people in north-east China, has been hit hard by a slowdown in exports and rampant overcapacity in heavy industry sectors such as steel in recent years. Its economy contracted in the first quarter of last year, making it the first Chinese region in seven years to report negative growth.

    Liaoning is no stranger to controversy. The Communist party’s disciplinary agency said last year it had launched a corruption probe into Liaoning’s former top official, Wang Min, who was provincial party secretary from 2009 until 2015. Bo Xilai, a rising political star felled by a murder scandal in 2012, was the province’s governor from 2001 to 2004.

    Last year China’s rubber-stamp national parliament expelled 45 lawmakers representing Liaoning over a bribery and vote-buying scandal. An additional 523 Liaoning deputies also resigned or were disqualified for their involvement in the scandal, decimating the provincial legislature.
     
  2. BMD

    BMD Lt. Colonel ELITE MEMBER

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    http://money.cnn.com/2017/01/18/news/economy/china-province-falsified-economic-data/

    Chinese province admits falsifying economic data for years

    by Sherisse Pham @SherisseJanuary 18, 2017: 9:16 AM ET
    China: The 'other' economic indicators
    dose of skepticism. But Chen's admission is particularly candid.

    Related: The $13 trillion question: How fast are India and China really growing?

    In some cases, officials inflated government income by more than 100%, according to Xinhua. Revenue for one Liaoning county was reported to be 2.4 billion yuan ($350 million) in 2013, but an audit office later corrected it to 1.1 billion yuan ($160 million).

    Central government inspectors warned Liaoning officials of "the prevalence of economic data fraud" back in 2014.

    [​IMG]
    Liaoning's heavy industries have weighed down the province's economy recently.


    The province's numbers aren't looking so good anymore. It reported last year that its economy was shrinking as traditional industries suffered.

    It had the worst performing economy out of 31 regions across China in the first quarter of 2016, according to Xinhua.

    "Our province failed to meet the expected targets," Chen said of Liaoning's disappointing recent figures. The province has a population of 43 million, bigger than that of California.

    Related: China's economy holds steady -- but for how long?

    China's overall economy expanded 6.7% in the third quarter of 2016, right in line with the previous two quarters. Economists expect it to have grown at a similar pace in the fourth quarter, too.

    Some analysts who are dubious about China's remarkably smooth numbers turn to proxy measures to gauge the health of the economy. They look at electricity output, freight shipments and seaport cargo volumes.

    China replaced the head of its National Statistics Bureau last year.

    The new chief, Ning Jizhe, said last month that the falsification of local statistics still happens in some areas from time to time, warning of heavy punishment for those who fake official figures.
     
    Pundrick likes this.
  3. BMD

    BMD Lt. Colonel ELITE MEMBER

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    Tip of the iceberg?
     
  4. Pundrick

    Pundrick 2nd Lieutant FULL MEMBER

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    It has always been the case. They have shown inflated data since 2004, just to keep their ratings intact and generate positive sentiment in the world market.

    Even the current 6.7% growth number is very controversial, but the rating agencies don't give a damn on this issue, they enjoy the money from Chinese lobby and never degrade their rating. The bubble some of the economist talking about is actually real, and when it will burst. Some big dreams will be shattered.
     
    Kalmuahlaunda and BMD like this.
  5. xxqa_ds

    xxqa_ds FULL MEMBER

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    we all know that the data is not accurate, because the reason for reasonable tax avoidance. In fact, in general, the government said there is a 7% growth rate, about the actual growth of 7.1~7.2%. Because China, some areas of concealed data, more data in some areas. The accuracy of the data is not the same everywhere, too complicated.
     
  6. randomradio

    randomradio Mod Staff Member MODERATOR

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    Data is falsified so local leaders get promoted quicker. Once data becomes too big, it becomes difficult to hide. Once there's a crisis, it comes tumbling out. Liaoning is the steel province of China, and we know that the steel market is down, so the crisis amplified the impact of falsification.

    What you are talking about is the shadow economy. But it's difficult to say whether the shadow economy is growing faster or slower in China, or anywhere else for that matter.

    In China it is simple, if growth is faster than projections, then data will be falsified to show slower growth. If growth is slower than projections, then data will be falsified to show faster growth. This equalizes over the long term. But now, it's difficult to manage that because China is under a major slowdown.
     
  7. Lion of Rajputana

    Lion of Rajputana Lieutenant FULL MEMBER

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    This is just barely scratching the surface, there might not be a more shady and unreliable country when it comes to economics than China. They fake all sorts of data and statistics, they engage in currency manipulation, they build things (like skyscrapers and office buildings) for the sake of building so they can claim certain economic growth rates. The list goes on.

    That's why I get surprised when some people, especially Indians, get overawed or overly enamored with China saying we should be like them or whatever. China's growth is not sustainable, it's a bubble that's gonna burst.
     

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