Analysis: China's numbing numbers
By Edward C. Lanfranco
UNITED PRESS INTERNATIONAL
Beijing, China, Jan. 25 (UPI) -- China's top number cruncher combined current and historical economic data with a dollop of party propaganda at a press conference in the capital on Tuesday.
Commissioner of the National Bureau of Statistics Li Deshui painted a pretty picture for China's economic performance during 2004, saying the preliminary estimate of gross domestic product was 13,651.5 billion Yuan, the equivalent of $1.664 trillion.
The country's economy grew by 9.5 percent in 2004, a year Li characterized as "without big ups and downs."
Li made the comments at a briefing hosted by the State Council Information Office, the organization responsible for the interface between the Chinese government cabinet and media.
One facet mesmerizing China watchers at home and abroad is its staggering statistics.
The numbers game can be mind-numbing as one assays myriad data concerning the world's largest country of 1.3 billion people. Many numbers roughly approximate the Chinese condition; however, few truly reflect the complex realities taking place.
Unreliable statistics are commonplace both because of the sheer weight of information to be processed, as well as a tainted track record of distorting figures for political purposes.
Every number bandied about when analyzing China must be viewed with healthy skepticism.
The two most egregious examples of disasters derived from bad data date from the 1950s, when delusional industrial and agricultural production figures led to policies causing the deaths of tens of millions during the Great Leap Forward, and the SARS epidemic two years ago when the former Minister of Health Zhang Wenkang tried to lie about the number of sick and dead to reporters amid the crisis, resulting in his dismissal.
[My comment: while the author claims the current statistics in China is inaccurate, why he just trust the old statistics (in terms of how many people were really dead as a result of the Gread Leap Forward?) so much? Not consistent at all!]
On Tuesday an American business wire service reporter asked Li to give recent key historical data, bringing important aspects of the numbing numbers issue to light. It illustrated the revisions China does attempting to provide better accuracy, and the essential watchdog function of journalists checking facts against potentially fudged figures.
The statistics commissioner was asked to provide China's fourth-quarter 2004 GDP figure, the country's Consumer Price Index rate for December 2004, revised GDP data for the last five quarters as well as to talk about the new methods of determining the final GDP number.
Going by his own set of numbers, Li responded: "In 2004 the first-quarter GDP was 9.8 percent and 9.6 percent for the second quarter; the first half of 2004 China's GDP was 9.7 percent.
"During the third quarter we revised the figure from 9.1 to 9.5 percent, and we have a current estimate of 9.5 percent growth in the fourth quarter; for all of last year, we have an initial estimate of 9.5 percent GDP," he said, adding: "It was a surprise -- higher than you'd expect."
Li stated quarterly figures reflected balanced growth reiterating there were no major swings in the economy last year. He attributed the first fourth quarter estimate of 9.5 percent to slowed industrial production and fixed asset investment in concert with increased grain output and sales derived from the autumn harvest.
After noting China's 2003 GDP was 9.3 percent, Li said the preliminary estimate for China's annual average rate of GDP growth over the 25-year period since the economic reform movement began in 1978 was 9.4 percent. "2004 was above average" he dryly quipped.
The commissioner said, "December data for major indicator were as follows: value added output of industrial enterprises rose 14.4 percent; there was 21.3 percent growth in fixed assets for urban areas; a 2.4 percent growth in CPI, and 1.3 percent growth for retail sales prices."
Li turned to accounting procedures saying, "It's been over a year since the NSB revised its method of calculation, so it's time for me to say a few words about the achievements we've made in this field."
The NSB head claims his office has standardized regional accounting techniques in use, changing its calculation method from per capita by household registration to one looking at permanent populations, and implemented a three-phase system of data revision.
One benchmark determining whether or not Chinese numbers are creditable (and if Li Deshui should keep his position) was also touched upon in his response: i.e., verification.
Aside from standardizing methodology, the commissioner mentioned tightening controls on indicator reporting by sector-required corroboration, and that falsification of provincial data was a serious criminal offense.
China issues three sets of data determining economic performance for any given time frame: preliminary, revised, and then final numbers. These calculations take up to a year before a definitive value has been decided.
Verification of statistical reliability is today based on consensus reached with two cabinet-level bodies, the National Development and Reform Commission and People's Bank of China, plus the Chinese Academy of Social Sciences as well as Peking and People's University (two of the nation's best tertiary institutions).
While the goal is accuracy, huge gaps remain in the transparency process presenting information during each step of the process. Whether there is a cabal to confuse or simply a cultural misunderstanding on data presentation cannot be definitively determined.
Doubts and confusion on China numbers continue to exist.
These fears were reinforced during Li's press conference, when state-controlled television was prompted for the first question, pure propaganda geared toward the country's 800 million rural residents, most having the theoretical potential to watch or hear about the 7 p.m. news broadcast aired nationwide.
For the bulk of Chinese living down on the farm, news for the masses' TV consumption reported that agricultural production and grain commodity prices were up, thanks to the prescient policies followed by Communist Party.
Throughout the press conference Li stressed having a "scientific viewpoint" for data derivation and "increased grain production" uncomfortably reminiscent of Chinese propaganda from statements made in the 1950s.
United Press International had the question after China Central Television asking about the energy crisis confronting China in 2004-2005, one that threatens its ability to deliver the message of a better tomorrow if TVs don't have electricity, not to mention overall genuine economic performance.
In response Li's unwittingly touched upon China's biggest dilemma, its chronic waste of resources.
Li highlighted structural inefficiencies in power use, saying that 74 percent of the country's energy use went into industrial consumption; one that critics see as a deeper dilemma: China's systemic waste of human as well other resources.
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