Local government's muscular GDP data is water weight, says Beijing

[PAULSTANL3Y]

Local government's muscular GDP data is water weight, says Beijing
Staff Reporter 2013-07-14 08:58 (GMT+8)

Renminbi coinage. (Photo/CFP)

China's GDP will no longer be the only measure of the country's economic success, Chinese president Xi Jinping announced on June 28. The comparison of local and central government data has ensued in an analysis of the shifting climate of the economy, reports the National Business Daily.

Data provided by local governments are always more 'upbeat' than that of the central government. The central government is focused on the development of the country's economic development as a whole, while local government officials are looking to keep their jobs.

In 2012, GDP estimates by local governments at the provincial and city level totaled 57.69 trillion yuan (US$9.4 trillion), 5.76 trillion Chinese yuan (US$938 million) more than the 51.93 trillion yuan (US$8.46 trillion) Beijing had estimated. The discrepancy is as fat and looming as Guangdong province's annual economic output.

According to media reports, the discrepancy in 2009 was 2.68 trillion yuan (US$439 million) in 2009. This disparity rose to 3.2 trillion yuan (US$522 million) in 2010 and 4.6 trillion yuan (US$750 million) in 2011.

Beijing is now putting the brakes on the country's barreling pursuit of GDP growth. A report delivered at the 18th National Congress of the Communist Party of China stated that structural reform was more important than pure economic growth.

Xu Fengxian, an expert from the Chinese Academy of Social Sciences, attributed the discrepancy in GDP data to the connection between local governments' political record and GDP growth.

The National Bureau of Statistics of China failed to weed out inflated reporting last year when it launched a streamline report system in February to obtain accurate numbers. According to the bureau, the total industrial production value of 71 companies in a township in the city of Zhongshan, Guangdong province was reported at 8.5 billion yuan (US$1.4 billion), when it was later discovered that, in fact, the numbers were more like 2.2 billion yuan (US$362 million).

Most local governments still rely on investment as a driving force for the local economy. An unnamed deputy provincial governor from central China stated that while the central government had fixed the economic growth target at 7%, "we need to push the growth to over 10% because our provinces are just not relatively economically strong."

The official added that his province was able to meet the goal by relying on investment in basic infrastructure and industrial parks.

Cheng Enfu, a researcher at the Chinese Academy of Social Sciences, said the GDP index should not be the only way to measure economic development. People's income, quality of life, and the "level of happiness" should also be taken into consideration.