China mostly fixing its GDP statistics problems by 2019

Fifteen years ago, if you added up the gross domestic product of all China’s 31 provinces, you’d get a number more than 10 per cent larger than the official national total. By around 2019, the country will “nearly eliminate” that gap, according to Sheng Laiyun, chief economist of the National Bureau of Statistics.

China is shifting to the latest United Nations-based statistical standard, gathering more comprehensive data from a major census next year, and cutting local interference and double accounting by computing GDP for the provinces instead of relying on their own reports, Sheng said in an interview in Beijing.

Output reported by 31 provinces last year totaled a mere 3.7 per cent more than the statistics bureau’s figure for national GDP.

If it’s convincing, a reform that closes the gap would be a major win in China’s battle against flawed or fake economic data, which has fed scepticism from investors wanting to be able to trust what they read about the world’s second-largest economy. It would also be a triumph for the country’s economic chiefs, such as Premier Li Keqiang, who once complained that some statistics were “man-made.”

Beyond statistical rigor, China has also shifted the incentives. Pure economic output has become less important for evaluating local party officials’ performance, and punishments for fraud have been increased.

The statistics bureau also plans to roll out a new barometer of economic health, said Sheng, who became chief economist earlier this year after serving as spokesman for the agency and as the director of the division that compiles national economic output statistics. The “green development index” will include more than 50 indicators ranging from pollution to economic structure, and will have provincial breakdowns, he said.

A fourth census next year will provide even more accurate and comprehensive basic figures, and likely result in a smaller revision. A fresh national account system released in July will also improve accuracy of the calculation, according to the NBS.