BEIJING – China has a “phantom province” pumping out nearly 5.8 trillion renminbi (about $930 billion) in gross domestic product last year, about equivalent to the output of its richest province, Guangdong, Chinese media reported this week.
How so?
Deliberately inflated figures from local officials are largely to blame, domestic media reported, as officials seek promotion for delivering the high growth demanded by the state. And the problem of systemic exaggeration in the economy is growing, not shrinking, as the country becomes richer and is increasingly integrated into the global economy.
The world is accustomed to remarkable growth from China, which is now the world’s second-largest economy after zooming up the list to overtake Germany and Japan, and is projected by some to challenge the economic dominance of the United States. And other nations have grown accustomed to looking to China to drive global growth with those high numbers. As Yi Gang, the deputy governor of the People’s Bank of China, the central bank, said at the World Economic Forum in Davos last month, “I think China’s growth rate will be about 8 percent this year.”
Yet back home, officials are faced with figures that can be off the mark by millions, billions or trillions of renminbi, meaning no one is entirely sure what’s going on. (The government in Beijing has its own way of dealing with the problem: The incoming prime minister, Li Keqiang, once reportedly said financial data in China was “man-made” and he relied instead on three indicators: electricity consumption, rail cargo and bank loans.)
This week, Chinese media reported widely on China’s “phantom province,” the G.D.P. excess that resulted when the economic growth figures from 31 provinces, municipalities and regions were added up and compared to the different, national G.D.P. figure that the government uses. In 2012, the discrepancy reached a remarkable 5.76 trillion renminbi, its biggest ever and the equivalent of the output of Guangdong province, itself an economic powerhouse, the media said.
For 2012, the national G.D.P. figure is estimated to be nearly 52 trillion renminbi (about $8.3 trillion,) while the provincial total was nearly 58 trillion (about $9.3 trillion.)
“Media exposes total G.D.P. of all provinces exceeds national G.D.P. by over 5 trillion renminbi,” (the exact figure was 5.76 trillion,) a headline announced in the 21CN News.
The gap is getting bigger, fast: in 2009, total provincial G.D.P. was nearly 2.7 trillion more than national G.D.P.; in 2010 it was more than 3 trillion; in 2011 it was 4.6 trillion, the Beijing News reported.
In a chain of exaggeration that begins at the village or county level, the figures pile up until they overreach any possible national total, the articles indicate.
The cause of the problem? “G.D.P. ‘achievement,’” said an article in the China Youth Daily, which is run by the Communist Party’s Youth League, referring to the system whereby officials are promoted for achieving high growth rates so they deliberately exaggerate.
The government has tried to stop the mendacity by launching investigations and threatening to punish offenders, but the problem is stubborn, the article said.
The solution?
“Only painful and determined reforms can change the achievement-based evaluation system,” the article said, including: sustained checking of officials’ reporting, increasing the rights of ordinary people to evaluate officials, taking away local officials’ sole responsibility for G.D.P. growth, the environment, public services, people’s prosperity and sustainable development.
