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Politics

Crunching the Numbers

Former chief of China’s National Bureau of Statistics Ma Jiantang shares his insights over the credibility issue with China’s official economic data and the measures the government is taking to address it

By NewsChina Updated Jan.1

For some time, China’s official economic statistics issued by the authorities have been taken with a grain of salt, as they are widely perceived to be at least to some level subject to manipulation and fabrication. It is not just that the combined GDP output reported by all provinces, regions and municipalities routinely exceeds that reported by the national government, official figures on various key economic indicators such as housing prices, personal income, inflation and unemployment are often considered to not reflect reality.  

The Chinese government has made various efforts to address this problem. In 2017, three provincial-level governments admitted, for the first time, that some of the GDP figures they had released were fabricated. In June 2017, China enacted a Regulation on the Implementation of the Statistics Law to standardize the procedure of the collection of data at various levels.  

In June, the authorities launched a reform plan to unify the calculation of GDP at the local level, which is scheduled to be implemented in 2019, in an effort to address the persistent discrepancy between the combined GDP figures reported by provincial and local governments and those reported at the national level. More recently, in late September, the central government issued a decree on “preventing and punishing” the fabrication and manipulation of the collection of national statistics, setting up an accountability and punishment mechanism for officials involved in such behavior.  

As reform in this area is advancing, NewsChina talked to Ma Jiantang, former Director of the National Bureau of Statistics (NBS) for his insights into what has caused the existing problems and the prospects for the future. Ma currently serves as Party Secretary and Vice-director of the Development Research Center of the State Council. He served as chief of the NBS from 2008 to 2014 and kickstarted major reforms in the way it collected data during this period.  

NewsChina: We know that reform was already underway during your service as NBS director. What was your assessment of the problem of data fabrication when you took office? 

Ma Jiantang: Before I was appointed NBS director in 2008, I served as vice-governor of Qinghai Province. My assuming the new position in 2008 coincided with the global financial crisis, which put great pressure on the Chinese economy, and the reliability of economic data was ever more important. I realized that the major task during my tenure would be to promote the accuracy and credibility of official statistics.  
 
NC: During the early periods of your tenure, there was a well-known scandal in the NBS, dubbed the ‘1.5 percent incident,’ when the NBS reported in early 2010 that housing prices in 70 cities had increased by a mere 1.5 percent in 2009 over the previous year. But another figure on the real estate industry the NBS released earlier showed that housing prices across the country increased by an average 24 percent in 2009. The discrepancy between these two figures caused major public outcry over the credibility of the data. How did you deal with that scandal? 

MJ: Indeed, the 1.5 percent incident had a major impact on the credibility of the NBS. Following the public outcry, I did some fact-checking, and I found that the method used by officials to calculate the figure was to take the average of the month-on-month increase of the 12 months of 2009, which actually showed an average month-on-month fluctuation, rather than an overall yearly increase.  

After that incident, we made some serious efforts to improve our data collection procedures. For example, in the past, we relied on survey data submitted by developers for real estate statistics. After that, we started to use data recorded by housing registration agencies. We also employed more up-to-date data mining techniques to ensure our statistics are reliable.  
 
NC: How about other data? For example, a major complaint among the public is the figure on average monthly wages released by the NBS. Many people felt that the official figure was far beyond what is widely perceived by the public. Can you explain that? 

MT: Yes, when I saw these complaints, I felt very ashamed. What I found after taking office was that the NBS only collected data regarding monthly salaries of those working in government agencies and State-owned enterprises, while leaving out the entire private sector, which accounted for much of the economy. This no doubt led to a distorted figure. We put both the private sector and small businesses owners into our database to address the problem.  
 
NC: We all know that during your tenure, the NBS launched a major reform, referred to as the ‘four projects.’ Can you tell us about the reform and what it achieved? 

Ma Jiantang

MJ: Before 2009, the data collection system employed by the NBS was not a unified system. For example, different departments in different regions had different definitions for the same indicator and used different formulas to measure them. Even the same company could have different names under different authorities.  

So in January 2009, we launched an initiative focusing on four areas of improvement: to establish a database of enterprises, to set up a standardized data collection spreadsheet, to adopt a unified data collection software and to employ an IT network system that linked directly to the NBS.  

A major achievement of the ‘four projects’ was to link the NBS directly with the data source, which greatly improved the reliability of our statistics, while in the past, data had to be collected through the government hierarchy, which made it subject to manipulation. The reform is an ongoing process. So far, our IT platform can collect data directly from 1.1 million companies, and each of our 20,000-strong data collecting staff are now equipped with handheld devices that  
allow them to input data directly into our central database at the NBS. 
 
NC: Do you think that the reform has fundamentally solved the problem of data manipulation? 

MJ: No, it has not. Data manipulation remains an issue. Despite implementing the new system, many local authorities have found new ways to undermine it. For example, we found that some local governments would give ‘advice’ to executives of a company covered by a survey about what the data should look like. In some areas, local governments even controlled the user name and passwords of the accounts held by local enterprises in the system, which allowed them to fabricate and submit data directly to the NBS. In an extreme case in 2011, the government of Yongchuan District in Chongqing Municipality even issued an official decree requesting local enterprises to hand over their data for official approval before submitting it to the NBS. 

NC: What have you done to address these problems? 

MJ: First, we exposed such cases whenever we found them. In 2012, we set up a designated section on our website to expose this type of behavior. Second, we issued a decree in 2014 to hold the companies accountable for submitting fabricated data. Third, we deployed a separate NBS legal team to inspect and discipline any foul play they found. But despite these efforts, it is very difficult for the NBS alone to address the problem.  
 
NC: Is it because of the NBS’ relatively low status within the central government’s institutional hierarchy? 

MJ: It has something to do with the existing institutional arrangement. For example, although provincial and local statistical bureaus report to the NBS, they are staffed and financed by provincial and local governments. It is inevitable that they will be subject to the influence of these governments. If the NBS could have the personnel and financial clout of its provincial and local branches, it would definitely help to fend off the political influence of local authorities. But ultimately, to deter foul play, China needs to strengthen implementation of the statistics law and increase penalties for flouting the law.  
 
NC: It has long been argued that a major reason behind the problem is the appraisal system for officials that focused solely on the growth of GDP. In the past couple of years, China has been trying to reduce the emphasis on GDP growth in its official appraisal system. Will this help curb the issue of data fabrication? 

MJ: It will help, but only to a certain degree. Even though the significance of GDP growth has been reduced in the official appraisal system, it will remain a major consideration for local officials as evidence of their achievements, given China’s political culture. A key to China’s economic success in the past four decades has been a political culture that encourages competition between provinces and between cities within the same provinces. The pressure will remain on local  
officials to obtain economic development, regardless of how the official appraisal system is reformed.  

Therefore, to address the problem of statistical credibility, we should go beyond sidelining GDP growth. The ultimate solution will be the establishment of an effective supervision system and the nurturing of a political culture that takes accountability and credibility seriously.
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