The National Bureau of Statistics of the Communist Party of China (NBSC) recently released economic data for the first quarter of this year, showing that the economy grew by more than 18% compared to the same period last year, and industrial enterprises above the scale achieved a 1.4 times increase in profits. It seems that China’s economy is leading the way in the global epidemic. In response, Dr. Cheng Xiaonong, a well-known travel economist and China expert, gave an interview to this station to decipher the state secrets of the Communist Party’s Bureau of Statistics.
Cheng Xiaonong said that China’s economic growth rate has always been very high in the world. Many people think that even Wall Street, the World Bank and the International Monetary Fund believe it, which means that this growth rate is very reliable, but the problem is that most Chinese people do not believe it. But to what extent are China’s economic growth figures inflated? It’s actually a little complicated to decipher.
Cheng Xiaonong explained to us that the Chinese Communist Party uses a lot of technical means to report the good but not the bad, to report the good but not the bad. He recently observed that there are three features in the calculation of industrial value added that can better explain why China’s economic growth statistics are always higher than those of the world. That is, the Chinese Communist Party’s Bureau of Statistics plays three technical techniques in statistics: first, “counting the big but not the small”; second, “counting the rise but not the fall”; and third, “counting the false but not the real”.
The first so-called “counting large but not small”, that is, in the industrial growth, the Chinese government’s specific algorithm is this: it provides that it does not count small and medium-sized enterprises, it does not count! Why? Because small and medium-sized enterprises are prone to collapse, and those that were in existence yesterday will be gone tomorrow. What to do? I only pick the big ones to count. Those national monopolies, state-owned enterprises, it does not fall into all of them, then small and medium-sized enterprises are basically not counted.
Cheng Xiaonong said that since about 10 years ago, according to the scope of calculation stipulated by the Chinese Communist Party, the annual revenue of an enterprise must reach 20 million before its industrial value added will be included in the calculation. And when the epidemic came, it was the small enterprises that closed down first. Since only the large, monopolistic companies were counted, the value of output was of course increased, and the collapse of all the small enterprises would not offset this growth.
The second one is the same reason for “counting the rise but not the fall”. That is, it set up a so-called “enterprise directory”, that is, a database of enterprises, only it is included in the database of these enterprises its growth it will count, so what kind of enterprises can be included? And the 20 million that I mentioned earlier have a relationship. Then there is another kind is that this enterprise last year’s revenue, let’s say 18 million, this year increased to 21 million, well, it will be counted in this enterprise, you see how many percent growth this year. But on the other hand, if the enterprise’s revenue last year was 30 million this year became 20 million, a loss, that is, 10 million less revenue, the enterprise is about to close down, then the CPC what to do? The Chinese Communist Party rules say, in this case, the enterprise is removed from the list, does not count! So, when this enterprise is prosperous, its income is counted as economic growth; then the enterprise is declining, it does not count. What business in the world is long-lived? So this is the way to cheat people.
Cheng Xiaonong said that the third method of the CCP is “counting the false but not the real”. If a company’s revenue increases because of price increases, for example, a product sold for 100 yuan last year, but this year the cost increases and sells for 200 yuan, of course the revenue increases. But that is not the real economic growth of the enterprise, because the product is still only one sold. The Chinese Communist Party statistics department only excludes a very small part of the price increase factor, and the price increase caused most of the increase in revenue is counted as economic growth.
[Recording]: These three (technical maneuvers) together, the CCP’s industrial growth would be at least several percentage points more than the actual real growth, and in some years it could be even more. So I want to emphasize one more point, that is, for China, the economic growth indicator is a political indicator, not a purely saying that this statistics bureau is reflecting the real economic activity, not like that. Rather, the government proposes a direction of economic development, so in order to prove that the government is always right, so the statistics bureau must provide an economic data that meets the needs of the government, so this growth rate is created. The method I just mentioned, that is, “counting the big but not the small” and so on, the finesse and mystery of this lies in what kind of technical method the Bureau of Statistics uses to achieve a calculated result that the Communist Party’s top management asks them to accomplish.
Cheng Xiaonong added that the enterprises that can be included in the “enterprise directory” by the CPC Bureau of Statistics are those with annual main business revenue of 20 million yuan or more. 20 million is the current lower limit for calculating the growth of enterprises, but in fact, this lower limit is constantly being raised. At first the lower limit was 5 million in 1998, but the CCP later found that if a fixed standard was used to count, there were many small and medium-sized enterprises that had 5 million in annual revenue before they collapsed, and it was likely that they all collapsed the next year, so the lower limit needed to be constantly raised to maintain this tricky method of counting. In this way, the economic reality of the decaying, bankrupt and closing enterprises will never affect the economic growth statistics, and therefore, the economic growth rate of the CCP will always be “high growth”.
[Recording]: That means by raising the lower limit, I naturally ensure that the achievement of high economic growth demanded by the top management can always be accomplished by the calculation of the Bureau of Statistics. So, can you say that its calculation is completely false? Not really. But it is playing tricks, playing tricks, taking advantage of the fact that the public does not easily know the details of these, because this detail it is classified as state secrets. So its state secrets are in large part to cover up the ugly, to cover up its failures. So if you use the yardstick of reporting the good and not the bad, you can basically guess which aspect of the data and how it will be reported. So it’s an art, to put it nicely, but to put it badly, it’s a set of tricks. Some people joke that the People’s Daily, the mouthpiece of the Chinese Communist Party, has no truth except for the date, and even the economic data is fake.