March 14, 2005
THE 5 YEAR PLAN ALWAYS WORKS...ON PAPER:
China's GDP Figures in Doubt (Don Lee, March 14, 2005, LA Times)
Economic progress has been a top priority for Beijing. But it has been more like a religion in many regions, whose officials have gained recognition and won promotions based on achieving top GDP growth rates. The upshot is that for years, many provinces, counties and cities have submitted fraudulently inflated statistics.Last year was no exception. Although China posted a sizzling growth rate of 9.5%, nearly all of the major regions reported GDP increases that were even higher. Based on these local reports, China's top government statistician said, the country's GDP growth for last year should have been as much as 15.5%.
This charade was tolerated in the past. But more recently, it has become an embarrassment to the central government as foreign investors and analysts, among others, have come to question the credibility of China's statistics.
Somewhere at Langley there's a whole roomful of analysts still predicting that Soviet GDP will surpass ours soon. Posted by Orrin Judd at March 14, 2005 9:12 AM
It does make you wonder how China is going to seriously get on a regional war conflict footing with the U.S. and its other East Asian allies, if they're having the same sort of problems that the Russians had 20 years ago (though admiittedly, you get more bang for your buck today with the higher-tech weapons available).
Posted by: John at March 14, 2005 9:17 AMJohn, They won't. So need to wonder.
Posted by: Bob at March 14, 2005 10:36 AMIt's absolutely mindboggling that, blinded by greed and wishful thinking, so many smart people failed to to do a very basic mathematical exercise as a check on reality.
For simplicity, let's assume there are only four reporting levels from bottom to top in China: village/city, district, province, central government ministry. Let's further assume that each level jacks up the economic growth rate reported to the next level by 15%.
So the village/city's growth rate, which is actually a respectable but not "sizzling" 5.45%, is reported to the district as 6.3%. The district, in turn, reports this 6.3% to the province as 7.2%. Then the province changes the 7.2% to 8.3% when it reports to the central government ministry. Finally, the ministry revises the 8.3% to a "sizzling" 9.5%.
Take away all the fancy talk about the "vast China market," and show this simple series of numbers to any student in an introductory MBA or public policy class. Even the D student will see that there's something fishy going on and that it might not be too smart to bet the family farm on an exploding Chinese economy.
Posted by: X at March 15, 2005 12:21 PMX:
Oh, I don't know, the "exploding" part seems worth a wager.
Posted by: oj at March 15, 2005 12:39 PM