Local focus shifting away from GDP

Updated 2018-01-17 09:21:03

News of false data shows move to quality of growth: experts

Amid China's transition toward higher-quality development, local provinces are taking the initiative to "squeeze water" from economic indicators, which experts described as a bold move that could actually help boost regional growth.

At the beginning of 2018, two Chinese provinces admitted to having previously falsified economic data, and said they would have to revise down their 2016 GDP figures.

North China's Inner Mongolia Autonomous Region said on January 3 that some of its lower-level government bodies had inflated their 2016 income by a total of 53 billion yuan (.17 billion) and industrial output by 290 billion yuan, the Xinhua News Agency reported.

And Binhai New Area, a State-level development zone in North China's Tianjin, trimmed its GDP figure for 2016 by 33.5 percent. The area had previously claimed that its GDP surpassed 1 trillion yuan in 2016, which would have been a rise of 10.8 percent on a yearly basis, media reports said on Friday.

The two joined Northeast China's Liaoning Province, the first province to admit in January 2017 that some local fiscal and economic figures between 2011 and 2014 had been falsified.

Also, a total of 10 cities and counties in four provinces, including Southwest China's Yunnan, Central China's Hunan, Northeast China's Jilin and Southwest China's Chongqing, inflated government revenues by about 1.55 billion yuan in the third quarter of 2017, according to the latest data from the National Audit Office.

This shows that "local governments are shifting their focus from speed of growth to quality, and they want to find out the real situation of regional economic development," said Cong Yi, a professor at the Tianjin University of Finance and Economics.

Niu Li, director of the Macroeconomic Research Office at the State Information Center, agreed, saying that it is meaningless for local governments to overstate GDP data as China is now seeking high-quality growth. "Genuine economic data can really help boost regional development," Niu said.

Focus on quality

Cong noted that some local officials have inflated economic figures to make their own political performance seem more impressive.

But such behavior has the effect of adding pressure to regional economic development in the future, as well as concealing some potential risks, experts said.

"Data falsification also shows that Chinese provinces face various difficulties during their structural upgrading and transformation from traditional sectors to emerging industries," Cong said.

Compared with other areas, provinces in northern China, including Liaoning and Inner Mongolia, have experienced slow economic growth in recent years due to an outflow of capital and talent, Liu said.

According to the report to the 19th National Congress of the Communist Party of China, the country's economy has been transitioning from a phase of rapid growth to a stage of high-quality development.

Local governments are expected to comply with the new development model, and to aim at factors like environmental protection instead of just GDP, experts said.

In August 2014, East China's Fujian Province canceled the GDP-based performance assessment mechanism in 34 cities and counties while focusing more on the growth of the agriculture sector and ecological protection, local news site fjnews.fjsen.com reported.

South China's Hainan Province also announced at the end of 2017 that it would abolish the GDP-based evaluation system in 12 cities and counties, according to media reports.

Unified calculation system

The different GDP calculation systems have also affected economic figures, Liu said.

The National Bureau of Statistics (NBS) announced on October 31, 2017 that China will apply a unified GDP calculation system in 2019 to replace the current system in which national GDP and regional data is calculated separately by the NBS and regional offices.

Li Xiaochao, deputy head of the NBS, said that the government is working to unify accounting systems at national and regional levels, which will narrow the gap between national and regional GDP data.

A unified GDP calculation system will help improve the understanding of the regional economy, as well as boosting the central government's statistical credibility, according to experts.

Cong forecast that China's GDP for 2017 would be between 6.7 percent and 6.9 percent and that the growth rate will be around 6.5 percent in 2018.

China's GDP expanded by 6.9 percent in the first three quarters of 2017 and the figure for the whole year is set to be unveiled on Thursday.

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