How big is the Chinese economy? Answering that question isn't as straightforward as looking up the number on the National Bureau of Statistics website. China's GDP data are haunted by controversy, with widespread doubts about the accuracy.
The release last year of U.S. diplomatic cables by WikiLeaks has added further fuel to the fire. Records of a 2007 conversation between China's Vice Premier Li Keqiang—then the party secretary of Liaoning province—and U.S. Ambassador Clark Randt revealed that Mr. Li had little faith in the GDP data, at least at the provincial level. Mr. Li had said that the GDP data were "man-made" and "for reference only," according to the WikiLeaks cable. To keep track of growth he preferred to look at three different indicators: electricity output, freight hauled by rail, and bank loans.
But is the man tipped to be China's next premier right to distrust the GDP data? In 1998, with the Asian financial crisis in full swing and China's neighbors Thailand, Korea and Indonesia sliding into economic chaos, the NBS boldly proclaimed that China's growth was bowed but unbroken at 7.8% year-to-year, little changed from 9.3% in 1997.
That number was wildly at odds with evidence of much slower growth from output of cement and electricity, imports and airline passenger numbers—all data series that should closely track GDP. Some independent economists have concluded that growth for the year was probably close to zero.
It is not always on the upside that the NBS errs. In 2004, the government conducted an economic census with legions of statisticians pounding the streets to see whether there were parts of the economy that they had overlooked. The result was the discovery of previously unknown output equal to 16.8% of GDP—a massive addition to the size of the Chinese economy.
Political and technical problems continue to plague China's economic data, but the statisticians also have learned from their mistakes. The exaggerated claims of 1998 were largely the result of provincial officials fabricating the output data for their patches.
In the past 13 years, the NBS has gone to considerable efforts to cut out the middleman. Data for the majority of industrial output are reported directly from enterprises to the NBS.
Underestimation of the size of the economy before the 2004 census reflected a simplistic approach to calculating output. Through 2004, the NBS broke the economy up into just 16 sectors, ignoring large parts of the service-sector. Since 2005, statisticians have broken the economy up into 94 sectors.
True, local data continue to be exaggerated, but exaggerated provincial data no longer mean that the national data are unreliable. In an ideal world, the provincial data and the national data would tell the same story. But in the real world, A lower number for national GDP than the sum of provincial suggests that the NBS is taking steps to free the national data from the effects of local exaggeration.—Tom Orlik
Tech CEOs Pledge
To Walk 'Red' Pride
A tide of "red" pride sweeping through China ahead of the 90th anniversary of the founding of the Chinese Communist Party appears to have swallowed up several of the country's tech-industry titans.
More than 60 of the biggest names from China's high-flying Internet sector gathered recently at a museum marking the site of the CPC's First National Congress in Shanghai to sing revolutionary songs and attend a party lecture, according to reports from the state-run Xinhua news agency.
Among those taking part in the tour were some of the country's most successful private businessmen, including Baidu Inc. founder and Chief Exexcutive Robin Li, Sina Corp. CEO Charles Chao, and Sohu.com Inc. CEO Charles Zhang.
While the party has a long tradition of employing famous entertainers to spread its message, however, it's far less common to see entrepreneurs put to the task—not least because their massive wealth clashes so starkly with the platform of self-sacrifice and common struggle on which the party was founded nearly a century ago.
But if Mr. Li and his fellow executives make imperfect spokesmen for the party, their willingness to toe the party line might bring peace of mind to leaders in Beijing grown nervous over the disruptive potential of the Internet in the wake of uprisings in the Middle East.
And with a once-in-a-decade leadership change coming up in 2012, it certainly can't hurt to help China's stars of business remember their place in the hierarchy.
As Xinhua quoted Sina's Mr. Chao saying: "The way the Chinese Communist Party was able, in all manner of difficult circumstances, to grasp the situation, formulate a strategy and concentrate power—this is deeper than anything found in an MBA textbook."—Josh Chin