China is cracking down on fake economic data, perhaps partially in response to concerns from those outside the country that much of the nation’s data is fabricated to reflect what the government wants to see, rather than what is actually happening.
According to Bloomberg, citing a statement that was published on China’s National Bureau of Statistics (NBS) website on Thursday, the government has created a new enforcement team aimed at improving the quality of data.
“The crucial work is to prevent and punish data fabrication and ensure the authenticity and accuracy of the statistics,” said Ning Jizhe, head of the NBS, according to the statement.
China’s economic statistics have been widely criticised from those outside the country, with many, including an increasing number in financial markets, often overlooking what is presented given concerns over its reliability.
Take the nation’s headline GDP figure as a prime example as to why many are sceptical.
In the past nine GDP reports, including the March quarter figure of 6.9% released earlier this week, the number has either been in line or exceeded market expectations by 0.1 percentage points.
There’s centrally-controlled and then there’s centrally “controlled”.
The stability in the GDP data, a remarkable achievement given the size of the Chinese economy, helps to fuel the belief that the data is simply too good to be true, particularly when it’s released around 15 days after the quarter ends.
For other major nations, it takes considerably longer to report what was produced in the economy in any one quarter, and even then it’s often revised over the subsequent quarters and years.
Matters haven’t been helped by news that policymakers in some northern Chinese provinces were found to have fabricated growth figures in the years following the global financial crisis, overstating what was truly happening on the ground to meet goals set by the central government in Beijing.
Other data releases, such as the prominent manufacturing PMI report from the NBS, have also been unnervingly steady in recent years, bucking the trend seen in the private IHS Markit manufacturing PMI survey.
Given the establishment of this new enforcement team by the government, it may result in a little bit more volatility, and perhaps a little more confidence in the authenticity in the data.
Time will tell.
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