Sat, Jan 20, 2007 page10

• China reins in provinces' rigged statistics

  NO CHEATING Beijing's emphasis on meeting goals has pushed provinces to beef up economic data, but state statisticians will be keeping a close eye on future figures

  • AFP
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  China's central government has moved to stop its provinces from rigging their economic growth numbers, a widespread problem that has outraged as well as embarrassed Beijing, state press reported yesterday.

  Survey teams will report directly to the National Bureau of Statistics, rather than to provincial governments, which often alter their numbers to make it appear that Beijing's economic targets have been met, Xinhua news agency said.

  "It often happens that local governments interfere with the accounting to make them look better than they are," Xinhua quoted Cai Zhizhou (蔡志洲), an expert in the field at Beijing University, as saying.

  The head of the statistics bureau, Xie Fuzhan (謝伏瞻), reportedly told a conference on Thursday that rural governments had provided a "wealth of falsified information" to Beijing recently as economic numbers were gathered.

  "Some census takers did not follow the collection procedures and fabricated figures to make sure official targets were reached," Xie said.

  For years, economists and observers have held that China's statistics are incorrect and that the economy was expanding at a much faster pace than the official rates.

  Largely to blame for the misreporting is a system that has made the pursuit of economic expansion and development the top criteria for provincial cadres' political advancement.

  China's key economic planner, the National Development and Reform Commission, last year warned provinces to better toe the line on Beijing's economic directives.

  It issued in August a damning report that showed the economies in three quarters of China's provinces expanded at 12 percent or more in the first six months of last year, above the official national figure of 10.9 percent.

  The report said the disparity meant that in the first six months of last year, China's economy was likely an estimated US$100 billion bigger than the official US$1.1 trillion figure.

  To better enforce the rules, at the end of last year the statistics bureau formed its own survey teams in every province.

  "The NBS will improve unified accounting of added value in the agriculture and construction industries and speed up the local GDP accounting by central government," Xie said.

  Still, China's cabinet kicked off a closed-door economic conference yesterday that is expected to map out key reforms to improve the management of its increasingly complex financial sector.

  Top policymakers convening the two-day National Finance Working Conference chaired by Premier Wen Jiabao (溫家寶) hoped to draw up a blueprint that will lead to the overhaul of the financial system, Xinhua said.

  State media said one of the key proposals would be to grant Central Huijin Investment Co (中央匯金), an investment holding company under the central bank, more independence in the administration of China's US$5 trillion worth of state assets.

  Another plan on the table is to streamline the unwieldy management of China's various state economic policy agencies by creating a new super inter-agency in charge of the state's financial affairs.

  China's financial system today is a mixture of archaic state-planning and new market mechanisms, which has made the management of the world's fourth largest economy increasingly difficult.

  Some of the major challenges have been reforming China's securities markets, its currency and monetary policy.

  Also on the cards are reform of two key state banks, including the troubled China Agricultural Bank (中國農業銀行) and China Development Bank (中國發展銀行), a state policy lender, observers said.
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