In 1998 when Chinese GDP numbers were released to the public, everyone was shocked. Contrary to the general impression of a sharp declining growth in the economy that was almost due to both the flood damage and the financial turmoil in Asia the official GDP growth was reported to be 7.8%, putting Chinese economy on a rather satisfactory top level. Since then, almost every reexamination in the economic literature for 1998 numbers has challenged the official 7.8 percent.
On May 22, the Chinese media reported that the National Bureau of Statistics (NBS) in Beijing for the first time suggested their local branches throughout China that they should pay enough attention to the time-lag impact of SARS on the local economic growth. As a reminder, NBS stressed that each statistical body should guarantee the accuracy of their statistical numbers in order to reflect the depth of SARS impact. Obviously NBS this time really learned from their errors in the past and tried to make itself more credible.
The SARS spread in April had initially taken away the government attention onto the SARS itself, but quickly the impact of SARS on economic growth entered the leadership’s sight. The Politburo, as well as the State Council discussed the anti-SARS policies to prevent the economy from declining. At a local government level quick responses were made, and since then the monthly and quarterly growth numbers have flooded the newspapers and TV news. It was reported that both the central and local governments have spent about 10 billion RMB on the SARS-related programs, including the direct subsidies, tax cuts and exemptions, and other financial support for business community. Several pieces of information published in newspapers indicate that Shanghai, Beijing, and some other local governments have decided to put so-called key and large investment projects ahead of schedule in order to maintain this year’s growth. Past week has shown that the national GDP growth has declined from 9.9% in the first quarter to 8.9 in April. It was estimated that the second quarter will see 8.3%. SARS began to minus the GDP. Since, however, both central and local governments have adopted the demand-pull policies, and SARS contagion has been effectively controlled nationally, which is somehow beyond most observers imagine, it is much safer to say that the second half year GDP would be growing even faster than ever, if there is no return of SARS in November.
People are always curious about the accuracy of statistical numbers in China, and this time people are probably awaiting to know if the GDP figures are consistent with their feelings and observation. But few people in the streets of downtown in Shanghai really understand what GDP means to them, nor do they understand why their government has been so keen to increase the GDP figures. To all level governments, GDP is nothing but the economic development, and becomes nearly the sole indicator of economic growth. I can’t imagine any local government in any country in the world would be so interested to promote the economic growth. Local officials care about the GDP figures and have identified themselves with the local GDP numbers. In the past, they had various reasons to over-report the local GDP figure. Several years ago, such reporting system was largely replaced by sample survey and independent estimation method at national level, and at some local level later on. Such estimation methodology relies on some key estimators and past pattern of growth. That is something good, and would be much better than reporting system, as economists usually argued. Really? Recent interviews with local statisticians worried me a lot, because the statisticians can easily adjust the estimators (e.g. the ratio of value added to total output in a given sector), if they have to do so due to the invisible mouth of government. ?
Shanghai (15/6/2003)
By Zhang Jun, China Centre for Economic Studies
Zhang Jun is the director of China Centre for Economic Studies at Fudan University, Shanghai
