In 1998, former premier Zhu Rongji wrote three pieces of calligraphy for the Beijing National Accounting Institute, which, intriguingly, all read: “Never cook the books”, indicating his heartfelt dismay at the rampant corrupt practices in China’s accounting sector.
Twenty years on, not only has the private accounting sector shown no sign of improvement when it comes to professional integrity but the authorities, both on the central and provincial levels, have also been faking economic data on a massive and systematic scale.
On Jan. 17 at a meeting of the People’s Congress of Liaoning province, governor Chen Qiufa admitted for the very first time that a substantial number of municipalities and counties in his province had been found to have either exaggerated or faked key economic figures between 2011 and 2014. The actual numbers were much lower.
According to a report in People’s Daily, the actual amount of fiscal revenue of Liaoning province between 2011 and 2014 was 20 percent lower than what was reported to the State Council.
It’s believed that such massive falsification of economic figures was the result of a sustained and systematic effort that involved officials from all levels in the province.
And such a massive cheating could probably have gone unnoticed if Chen’s predecessor had not been removed from office in 2015.
And that raises a fundamental question: is this an isolated case or just the tip of the iceberg?
Apparently, the answer is self-explanatory.
Recently, Ning Jizhe, director of the National Bureau of Statistics, the country’s highest statistical body, published an article in People’s Daily in which he conceded, rather unusually, that it is “not uncommon” for provincial and regional authorities across the country to fake GDP data in order to exaggerate their local economic growth and claim credit.
And the reason local officials are jumping on the bandwagon of cooking the books just can’t be simpler: in the mainland, the major, if not the only, criterion to measure a local official’s job performance and determine whether he will get promoted is the degree to which he can boost the economy of the county, city, or province he is in charge of.
In other words, the more impressive the economic figures, the more promising an official’s your future.
The matter is compounded by the fact that economic figures are often regarded as state secrets, and there is a complete lack of public oversight of economic data collection and releases by the authorities.
Local officials can inflate their GDP figures however they want and whenever they like, and there is no way the public or the market can verify
To make things worse, while provincial authorities are eagerly faking their economic figures in order to make them look more presentable, it has also been an open secret that the central government in Beijing has been, from time to time, overstating the country’s GDP performance for political purposes.
For example, it might inflate the economic numbers in order to prevent the country’s foreign reserves from flowing out and to boost market confidence.
Ironically, Ning’s predecessor, the former director of the National Bureau of Statistics Wang Baoan is under criminal investigation for allegedly faking economic data.
In fact, the Chinese officialdom has a longstanding and deep-rooted culture of falsification.
Not only are economic numbers often faked but a lot of other important figures such as PM2.5 particles in the air, the actual amount of capital outflows and the real number of deaths caused by air pollution every year are also often “modified” by Beijing in the name of preserving public confidence and social stability.
As far as the mainland public is concerned, they are feeling increasingly numb and indifferent to such nationwide practices. They have gotten used to officials lying about everything.
This article appeared in the Hong Kong Economic Journal on Jan. 20
Translation by Alan Lee
[Chinese version 中文版]
– Contact us at [email protected]