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China’s GDP growth has been overstated by an average of 1.7%, says new research
New research reveals that the economic slowdown in China may be worse than the official statistics suggest since 2008, due to the potential inaccuracy in China's GDP reporting.

March 26, 2019 | Wendy Weng
  • China’s local governments have overstated local GDP figures, as they are rewarded for meeting growth and investment targets
  • China’s National Bureau of Statistics has not done enough to correct the misreporting by local governments since 2008
  • Two different approaches have been used to estimate GDP, which came to roughly the same conclusion

The economic growth in China may be lower than the officially published figures suggest, according to a recent research paper published by the US-based Brookings Institute. The paper, titled "A Forensic Examination of China’s National Accounts", concludes that China’s gross domestic product (GDP) growth rates had been exaggerated by about 1.7% on average every year from 2008 to 2016, and the aggregate investment and savings rate for 2016 was 7% lower lower than official figures.

“Since local governments are rewarded for meeting growth and investment targets, they have an incentive to skew local statistics,” the authors - Chen Wei, Chen Xilu and Michael Song from the Chinese University of Hong Kong and Chang-Tai Hsieh from the University of Chicago – wrote in the draft paper.

China’s National Bureau of Statistics has not done enough to correct the misreporting

China’s national GDP figures are based on data provided by local governments. China’s National Bureau of Statistics (NBS) acknowledged that local governments have misreported local GDP figures, and has been using data from their own economic censuses and administrative data to adjust the local figures. Since 2003, national GDP figures the NBS has produced are lower than aggregate provincial data, as local governments have inflated local GDP statistics, particularly by overstating industrial output and investment.

However, the study reveals that local governments increasingly exaggerate local GDP after 2008, but the NBS has not done sufficiently to correc...

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Keywords: China Gdp, Growth Rate, Aggregate Investments, China Local Government, , Value-added Tax, Tax Revenue, Trade Flows