GDP calculation must be tightened

The central government should strengthen legislation on GDP calculations to stop provincial and regional governments from fudging economic growth figures to curry favor from higher officials, says an article in the Beijing Times. Excerpt:

The sum of provincial and regional GDP values exceeded the national GDP value by 1.4 trillion yuan (9.9 percent) for the first half of this year. Official data show only 5 provinces have GDP growth rates below the national figure of 7.1 percent.

The conflict between the GDP figure of all the provinces and regions and the national average makes it very difficult for the central government to take decisions on macro-economic policies.

The difference has existed for years, with the largest gap between the two being 19.3 percent.

In China, the values of the national GDP and that of the provinces and regions put together are calculated separately, and the difference between them may be because of repeated calculations and different references. But it obviously is not a technical issue because the total of provincial and regional GDP values has always been higher than the national one.

Even the National Bureau of Statistics (NBS) has said some local governments could be fabricating their GDP values to add glitter to their economic performances and please higher officials. Some government leaders have even suggested doing away with local GDP calculations.

It's good to see the NBS making the gap between the two calculations public. It has shown respect to people's right to know, and is a brave step toward changing the situation. But it's a pity that the information released is still not complete. For example, it doesn't tell us which provinces could have fudged the GDP data.

China enacted a law on statistics 26 years ago. The need now is to introduce in stricter provisions and heavier penalties.

(China Daily 08/14/2009 page9)