GDP admissions by local govts due to necessity, not sincerity

TO DATE, the governments of Liaoning, the Inner Mongolia autonomous region and Tianjin have reportedly “taken the initiative” to admit that they had exaggerated their economic data in the past few years. China Youth Daily commented on Tuesday:

It is an intriguing timing that these provincial-level governments — more are expected to follow suit as the adulteration is probably not restricted to the three places — have acknowledged the inflation of their economic data, ranging from about 20 percent to 30 percent, mainly gross domestic product, industrial added value and government revenue, on their own initiatives.

But instead of these governments being courageous, their honesty comes from external pressure.

The central authorities will assume the responsibility for computing the GDP of provincial-level regions from next year. That makes it the last time provincial-level governments will calculate and report their own GDP, and thus the last chance for the local governments to admit their faults in falsifying the data.

If they miss this window of opportunity, they will face harsher punishments next year when the central authorities uncover the huge gap between the data they previously reported and the true situation.

Tianjin and Inner Mongolia chose to do so now. There will surely be some punishments for the local officials. But they still think admitting the fault now is better than having their falsehoods exposed next year by the central authorities. In other words, their “honesty” is the lesser of two evils. The provincial governments’ conniving with city and county governments to lie about their GDP is almost an open secret, because the total sum of the GDP reported by provincial-level regions has always been markedly higher than the national GDP calculated and issued by the National Bureau of Statistics each year, something that has for a long time been conveniently attributed to “statistical technical problems”.

After the central authorities take over the GDP calculations next year, it is believed the GDP of China will be more accurate in reflecting the true economic development situation of the country.