Chinese Statistics Have to be Taken with a Rock of Salt

I didn’t say that.  I am too much of a conservative when it comes to economic figures from China.  That’s why I have only ever warned our readers to take Chinese statistics with “a grain of salt”.  It turns out that I am wrong, and very wrong indeed, according to China’s top economist.  Zhou Tianyong 周天勇, a researcher at the central school of the communist party in Beijing, warns that the government must “not fool itself” that urban unemployment is at 4%.  The actual figure, he estimates, can be as high as 12%.  The discrepancy comes from the existing accounting procedure willfully ignoring the number of migrant workers who lose their jobs as a result of the global financial meltdown.  Zhou have published his findings in the China Economic Times 中国经济时报.  This is a link to the relevant section about unemployment figures.  I know it’s in Chinese.  Unfortunately I don’t have time to come up with a full translation.  But I’m sure there must be one somewhere around.

The Age today, however, uses Zhou’s research findings as a basis for questioning, once again, the credibility of official economic statistics published by the Chinese Government in Beijing:

CHINA’S Communist Party is paying a price for its long-abusive relationship with statistics. For starters, it has no idea how many millions of people have lost their jobs recently.

“China’s top leaders, experts, departments and ordinary people … have been bamboozled by the ‘wonderful’ situation of the fake urban unemployment rate,” wrote Zhou Tianyong, a researcher at the Central Party School in Thursday’s China Economic Times.

The leadership has resorted to sending scouts to train stations around the country to count how many migrant workers are returning to their villages from their city jobs.

One researcher returned last week to a leading government research centre with an estimate of 20 million.

There’s no way to cross-check if that figure is credible because the Government’s narrow unemployment series, the registered urban unemployment rate, is still sitting at 4 per cent – as it has for years.

China’s unemployment statistics are thought to be accurately compiled but badly designed.

The problem is worsened by bureaucratic reluctance to release survey information or allow others to conduct independent surveys.

And some believe the gross domestic product accounts are manipulated.

The report from the Age also touches on another important debate about China’s manipulation of GDP statistics during the Asian financial crisis in the late 1990s.  Go and check it out if you are interested in the topic.

The Vatican-based AsiaNews further elaborates on Zhou Tianyong’s recent publications:

Zhou, who has always supported greater liberalization and fair development, believes that the 4 trillion yuan in investment promised by the government will be only a stopgap measure, because it will be used mainly for large-scale projects, which create only temporary jobs.

It is a crisis that has been approaching for some time, since “the real unemployment rate has been steadily rising year after year, and next year is projected to be especially severe.” For this reason, Zhou warns leaders to give priority to the creation of new jobs. This is also because he is afraid that “the redistribution of wealth through theft and robbery could dramatically increase, and menaces to social stability will grow.” Zhou does not speak openly of corruption, which Beijing says it is uprooting, but is widespread among local governments and is one of the main causes of social protest. All of this “is very likely to create a reactive situation of mass-scale social turmoil.”

Come to think about it, statistics manipulation IS a form of corruption.  If the political leaders in China lack the will to crackdown on number fiddling, how can we expect them to have the gut to tackle corruption head on?

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5 Responses to Chinese Statistics Have to be Taken with a Rock of Salt

  1. Ned Kelly says:

    A rock of salt the size of Gibraltar.

  2. C.A. Yeung says:

    I thought you would have said the Ayers Rock. But then when I started searching about the famous rock in Gibraltar, I realised that your choice is far more appropriate.

    According to some ancient descriptions I came across: “Gibraltar marked the limit to the known world. To pass beyond it was to sail to certain destruction over the bottomless waterfall at the edge of the world.” This, I think, is an adequate metaphor for any attempt to make sense of China’s statistics.

  3. justrecently says:

    I think I’ve read an exchange of views between the head of China’s Statistics Bureau and a press conference some years ago. Asked if provincial or local authorities didn’t sugarcoat their statistics, the Beijing offical answered that this might happen from time to time, but that the central data were still accurate.

  4. Ned Kelly says:

    “Asked if provincial or local authorities didn’t sugarcoat their statistics, the Beijing offical answered that this might happen from time to time, but that the central data were still accurate.”

    Any Chinese businessman who takes that attitude about calculating his taxes, runs the risk of being shot in the back of the head. Unless he can calculate a 100 percent accurate bribe.

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