Chinese economic statistics have long had a dubious reputation among Western economists. The skeptics appear to have been roundly vindicated in January when China’s top statistician admitted that officials in Liaoning had inflated the province’s GDP figures between 2011 and 2014, and the confirmation of widespread statistical fakery now has economists looking under the hood at other provinces with questionable data.
According to a Financial Times analysis, Liaoning is probably not the only province that has been cooking the books, and the fakery could be even greater in other parts of the rust belt. By comparing Liaoning to other provinces that are even more dependent on coal, steel, and oil, the FT uncovered an interesting pattern. Even when outputs fell dramatically in each province, the reported GDP growth figures remained remarkably stable and positive:
Below is Liaoning. Strangely, when it admitted to a contraction in 2016, steel, coal and oil were already recovering.
The other provinces show a similar pattern in the three key industries. Output values weakened in 2012, briefly recovered in the second half of 2013 and then took a deep dive. Below is Hebei, home to one-quarter of Chinese steel production:
The FT analysis is worth reading in full, but the recurring pattern is this: the provinces’ reported GDP figures appear out of whack with the turbulent course of the coal, oil, and steel outputs on which their economies depend. This hardly inspires confidence in the reliability of Chinese statistics, and it suggests that provincial officials have been cooking the books to send a falsely favorable picture to Beijing.
Chinese officials say they are trying to correct the problem by implementing a unified statistical system to prevent the provinces from fudging the numbers. Even so, the earlier discrepancies remain, and economists are still in the dark about what actually happened to the northern Chinese economy between 2011 and 2014. And given Beijing’s other suspect data—an independent report recently showed that China was cheating on its steel cuts, for example—China’s trust problem is unlikely to go away.
The news is a reminder of how difficult it remains to read Chinese economic trends from the outside, at the mercy of doubtful Chinese statistics. And it is likely to harden opinion among China trade hawks in Washington—including President Trump—who have long argued that Beijing cheats on these matters.