Economic data released by China’s National Bureau of Statistics on April 16 for the 1Q 2021 showed that the economy grew by 18.3% in comparable prices compared to the same period last year; on April 27 the agency also announced that industrial enterprises above the scale achieved a 1.4-fold increase in profits in the 1Q. The Communist Party’s official media keeps propagating that China’s economy has completely overcome the epidemic and is leading the world in prosperity, ahead of the pack. From the above economic news, it seems so, but few people understand the “fishy” and mysterious statistics of the Chinese Communist Party, and the truth is hidden behind this “fishy” and mysterious. I would like to provide readers with a few “tricks” in the calculation of economic growth data by the Chinese Bureau of Statistics.
I. China’s economic growth data from the “Keqiang Index” once became popular
The economic growth figures released by the Chinese Communist Party authorities are usually ahead of the world. In countries and international organizations around the world, such economic growth data are accepted without question where the Chinese Communist Party has a deep influence, such as the World Bank, the International Monetary Fund, and the World Trade Organization, and so do scholars from other countries who prefer to praise the Communist Party’s achievements. However, independent thinkers cannot help but have some doubts: Is China’s economy really that good? Of course, doubts are no substitute for conclusions, so they often tend not to believe the economic growth figures released by the CCP, but are unable to come up with self-evidently reliable data.
When Li Keqiang was in Liaoning, he tried to use a few economic indicators that were less subject to political interference, namely electricity consumption, railroad freight volume and bank loans, to determine the real trend of the Liaoning economy. These indicators, known as the “Keqiang Index” in the media at the time, were once the subject of much international and domestic economic news coverage. The fact that the “Keqiang Index” received attention shows that China’s economic growth data is not reliable, and that the top management and local authorities in Beijing know it well; and the fact that the “Keqiang Index” became popular and was not criticized by the top management proves that the top management understands that the “Keqiang Index” has its own reasons. The “index” has its own reason, not “slandering the good situation”.
The “Keqiang Index” does not use GDP growth data to judge the economic situation, naturally, because the statistical process of GDP has produced pomp and circumstance. In 1987, I attended an economic analysis meeting at the State Planning Commission and found that the Ministry of Water Resources and Electricity had falsified its data. At that time, I suggested at the meeting that the Ministry of Water Resources and Electricity had falsified its statistics on the number of hours of thermal power generation in order to exaggerate the degree of overload of thermal power equipment in order to get more investment in power plants, because the number of hours of thermal power equipment utilization published by the Ministry in the fourth quarter of 1986 was calculated on the basis of 32 days in December. Wu Jinglian of the Academy of Social Sciences, who was also at the meeting at the time, was doubly surprised. Afterwards, the Department of Industrial and Transport Statistics of the National Bureau of Statistics admitted that the data reported to the National Bureau of Statistics by the Ministry of Water Resources and Electricity was accepted by the Department of Industrial and Transport Statistics as is, and no such problem was found.
Li Keqiang into Zhongnanhai, “Keqiang index” but no trace; he did not bring this set of ideas to Beijing, asking the National Bureau of Statistics to follow suit. Obviously, after Li Keqiang entered Zhongnanhai, he could only sing the “Central Government’s” “song of victory” according to the “rules”, while the “Keqiang Index The “Keqiang index” is obviously not in line with the “score and melody” of this “song”, it is a “miscellaneous”.
In fact, many big investment banks in the West often work out their own estimation methods to determine the real state of China’s economic growth in order to make business judgments. For example, Nomura Securities of Japan has studied its own method of analyzing Chinese economic data since the 1990s and has established an exclusive database. I spoke with the company’s researchers in Beijing in 1987, and at that time I found that they had a unique way of grasping the Chinese economy, often starting from details that Chinese scholars do not pay attention to. But they do not disclose these methods, and their estimates may not be very reliable.
China’s Rigid Economic “Growth”
One globally unique feature of China’s official economic growth data is that they always show a rigid “growth” that is essentially always “growth” regardless of economic conditions. The reason for this is that it is not an accurate reflection of economic reality, but a political necessity.
First of all, economic growth data is a propaganda tool of the CCP, so its function is not to reflect the true picture of real economic activities, but to make sure that it reflects the economic growth targets set by the top; that is, since economic growth (whether or not specific percentages are given) is a political measure reflecting the effectiveness of the CCP’s rule, it is necessary for the Bureau of Statistics to endorse this political indicator with economic growth rates. Therefore, the political connotation of the economic growth rate published by the Bureau of Statistics is far more important than its original function of reflecting economic reality.
Secondly, in this case, if the economic reality deviates from the direction and scope of economic growth set by the top management, the statistical bureau must try to remedy the situation by playing tricks with the statistical techniques until it produces economic growth data that meets the needs of the top management’s political propaganda. This is where the “fakes” and mysteries of the CCP’s statistics come into play.
Again, because there are always experts who know such “tricks” and mysteries, and who often dig up the real picture of economic activities from other related data, in order to prevent them from “getting their way”, economic statistics at the macro level are not fully disclosed in China, and many In order to prevent them from “doing their job”, in China, macro-level economic statistics are not fully disclosed, and a lot of data that can help project the real economic situation are classified as state secrets. In this way, the “fakes” and mysteries of the statistics are hidden.
In this sense, China’s statistics department is not simply an operational department dealing with survey data; it is also a “mouthpiece” for economic propaganda, and the statistics it produces must serve the political needs of the authorities. If no objective factors can be found to explain the economic decline, a politically “inappropriate” economic growth rate will not be accepted by the top management, including the invention of the “Keqiang Index”. “Li Keqiang, who invented the “Keqiang Index”, and the “heads” who work in Zhongnanhai will not suspend these “fishy” games played by the Statistics Bureau. “. So the Chinese economy is usually “growing” very fast.
Of course, there are other economic indicators that remain largely static no matter how much reality worsens, the most typical of which is the unemployment rate. This is a political indicator that highly reflects the success or failure of the Communist Party’s economic management, and the Bureau of Statistics does not dare to count it truthfully, but only to publish it as a “constant”.
In short, the goal of the Bureau of Statistics is to make the statistics published conform to the economic policy goals proposed by the top; whatever goals the top officials propose, or a slogan to promote economic achievements internally and externally, the Bureau of Statistics must calculate a figure that conforms to the intentions of the “top”. Such political indicators as economic growth rate, “above” the request is how much, the Bureau of Statistics will certainly give the data to meet the requirements, for the Director of Statistics, that is a political task. From this perspective, when you fully believe in China’s official economic growth data, it is the same as fully believing in the slogans of the Chinese Communist Party’s documents.
Three: Deciphering the statistical mystery of China’s economic growth data
China’s economic growth rate has actually become a numbers game designed by the statistics bureau, and if you do not understand the tricks, you cannot understand the truth about China’s economy. The so-called “fakes” and mysteries of the CCP’s statistics refer to the technical tricks played by the statistics bureau, while the mysteries refer to the output of such “tricks”. The “trick” refers to the statistical results of the output of this “trick”. In industrial statistics, the “cat” includes at least three “magic”: First, “counting large but not small”; second, “counting the rise but not the decline “; three, “counting the virtual not the real”.
“Counting the big but not the small” is to publish only the performance of large enterprises, not the profit and loss of small enterprises. The change in the economic boom is first reflected in the small and medium-sized enterprises, large enterprises are not easy to close down; not to mention that large enterprises include all monopolies, they also have the full support of banks, the economic downturn is naturally less impact than the competitive small and medium-sized enterprises. In this regard, the Bureau of Statistics has set a statistical “caliber”, that is, the “above-scale” industrial enterprises mentioned in the economic news quoted at the beginning of this article. This concept excludes all small and medium-sized enterprises, the so-called “above-scale”, the scope of which is constantly upgraded. According to the public introduction of the National Bureau of Statistics, from 1998 to 2006, it refers to all state-owned and non-state-owned enterprises with annual main business income of more than 5 million yuan; from 2007 to 2010, the scope of statistics was adjusted to industrial enterprises with annual main business income of more than 5 million yuan; from 2011, the scope of statistics was changed to industrial enterprises with annual main business income of more than 20 million yuan. The reason for the continuous “upgrade” is to “count the big not the small”, so as to avoid the decline and closure of small and medium-sized enterprises affect the economic “growth” rate.
“Counting the rise not the decline” is the statistics include only the better business performance of enterprises, but exclude the poor business enterprises. With the “above-scale” statistical “caliber” supporting the establishment of a statistical bureau of the “enterprise directory”; statistical economic “growth When the “growth” statistics, only the data included in the “enterprise directory” is used to calculate the economic “growth”. For this reason, the Bureau of Statistics divides enterprises into two categories, which are known in jargon as “above-standard enterprises” and “below-standard enterprises”, with “standard” being the “size” mentioned above. “also. If an enterprise’s performance rose last year and reached the above “scale” requirement, it will be included in the statistics as an “above-regulation enterprise”; if its performance falls below the above “scale” requirement this year If its performance this year falls below the above “size” requirements, and is clearly in a state of operational decline, or even into bankruptcy, then this year’s economic growth statistics will be “qualified” as “under-regulated enterprises”, removed from the “business directory”, and its last year’s performance record is also included in the statistics. With its performance record last year also erased. In this way, under the operation of the Bureau of Statistics, the decline, bankruptcy and closure of enterprises in the economic reality will never affect the statistics of economic growth, and naturally, the economic growth rate of the CCP will always be “positive”.
The “false accounting” is to count the industrial value added and profit increase caused by price increase as economic “growth”. Enterprise income is always calculated at current prices, and the Bureau of Statistics claims that it calculates economic “growth” by excluding the price factor and calculating the growth rate only at “constant prices”; technically this means dividing the current price output by the price index (output price index). If you want to test whether the Bureau of Statistics is deliberately underestimating the price index, so that the output of enterprises at “constant prices” is inflated, just compare the price index used by the Bureau of Statistics in calculating “growth”. However, the Bureau of Statistics never publishes this calculation parameter; not only that, the Bureau of Statistics also specifies that “from 2008 onwards, it will no longer release annual value-added data by industry above the scale”. In this way, by classifying the two key data, “industrial value added” and the price index, as “state secrets”, the Bureau of Statistics has blocked the door for experts to get a glimpse of the “virtual but not real” calculation. The door to the mystery of “accounting for the virtual but not the real” is blocked, so that the “accounting for the virtual but not the real” method will never see the light of day.
Fourth, the statistical game of the CCP’s economic growth rate
These three methods are in fact open secrets in China, as the National Bureau of Statistics has clearly explained on its website when explaining “statistical knowledge”, which is the reason for the quotation in this article. The NBS deceives most of its readers into not understanding the “trickery” involved, so it is not “ghosting” in secret, but rather “teasing” them openly, forgive me if you can’t do anything about my exaggerated economic The “growth rate” can do nothing about it. This kind of trick, the term used within the Bureau of Statistics is “statistical caliber or statistical scope”, as long as the play “statistical caliber”, you can easily make the economic growth data “reported good not bad “.
Below I cite a news report on statistics published by China’s National Bureau of Statistics (NBS) on April 16, titled “Value Added of Industries Above Scale Grew 14.1% in March 2021”. At the end of the news, there is a note on the “scope of statistics” which states that the growth rate refers to “industrial enterprises with annual main business revenue of 20 million yuan and above”; secondly, “Since the scope of industrial enterprises above the scale The scope of industrial enterprises changes every year …… and the data published in the previous year there are differences in the caliber, mainly because, (a) each year, some enterprises reach the size of the survey into the scope, there are some enterprises due to the size of the smaller out of the scope of the survey, as well as the impact of new production enterprises, bankruptcy, cancellation (suspension) of enterprises. “
The vast majority of readers see the words “industrial value added grew by 14.1%”, but very few people read the text of the above quoted note; even if they do, they may not understand the meaning. With this semi-transparent approach, China’s National Bureau of Statistics has in fact told us that its economic growth figures are not credible because they are not comparable to the previous year due to the numbers game of “counting the big but not the small” and “counting the rise but not the fall”.
What do we make of China’s economic growth figures? This is an advanced economic and statistical research topic. I studied statistics in college and have studied Chinese statistics for a long time since I started working, so I have accumulated some experience: first, to try to refer to unofficial statistics; second, to keep abreast of changes in the “statistical caliber” of China’s official statistics and to analyze how such changes affect the data itself; third, to look for the official statistics that are not used as much as they should be. Third, we should look for statistical indicators that are less commonly used by official statistical agencies to promote economic achievements in order to observe the Chinese economy.
It is not only naive to believe in the reliability of statistics in a communist country where statistics have become a means of propaganda.
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