Data fudging to be curbed

Latest moves expected to fix technical issues in country's statistics system

The central government will step up its efforts to stamp out inflated and falsified economic data after some local governments in the country cut their gross domestic product growth and admitted fudging key economic numbers, as part of the country's overall efforts to achieve high-quality growth, economists said on Monday.

The northern port city of Tianjin has substantially reduced the 2016 GDP growth data of the Binhai New Area, a business and financial district, by 33 percent to 665.4 billion yuan ($103.5 billion) from the initial official figure of 1 trillion yuan.

The municipal government admitted to the mistaken inclusion of economic activities of companies registered in Binhai district into the GDP calculation while their business activities actually took place elsewhere in the country.

Similarly, China's resource-based Inner Mongolia autonomous region also admitted that it had inflated its fiscal revenue and the industrial growth in 2016. The local government made a reduction of 290 billion yuan in the region's industrial growth in 2016, which was about 40 percent of the initial figure, according to a report by Xinhua News Agency.

The latest move by the local governments to adjust their GDP data reflected greater pressure from the central government to ensure data accuracy and its growing effort to address some technical problems in the country's statistics system, said Zhang Yansheng, chief economist at China Center for International Economic Exchanges.

"There is a need to make China's current statistics and evaluation system more scientific, law-based and transparent. And it has been recognized by the central government," Zhang said.

China's top policymakers have pledged to improve the country's statistics system and the performance evaluation of local governments with an emphasis on high-quality growth at the tone-setting Central Economic Work Conference held last month.

Economists believe that such a pledge will mean fewer incentives for the local governments to inflate their economic data. They also expect the central government is to likely play down the importance of GDP growth in the Government Work Report to be released in March that usually sets the country's annual GDP target.

Wei Wei, an analyst at Ping An Securities, said that the country's intensified effort to clamp down on risky debts held by the local governments could also be one of the reasons that prompted the latest GDP revisions as they can no longer use inflated GDP and fiscal figures to cover up their real debt burden.

"While more local governments may be expected to revise their GDP data due to greater debt pressure and fiscal restraints, the positive news is that future data will better reflect the real economic performance," Wei said in a research note.

With less emphasis on GDP as the sole performance evaluation indicator, local governments could shift more attention to other key indicators that gauge growth quality such as people's income, and the development of healthcare, education and the environment, Wei added.