Former finance minister calls out China’s dodgy data

‘There are insufficient figures reflecting negative changes’ in the economy, Lou Jiwei tells a business forum

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Transparency rarely trips off the tongue of a single senior official in the ruling Communist Party of China. It is a concept the red aristocracy barely understand.

When it comes to business practices or state-released data, the CCP elite never mentions the 12-letter word, preferring secrecy and stealth to sell the “China Dream” brand.

A striking example has been the positive-spin cocooning the economic numbers served up by the National Bureau of Statistics.

The situation has become so ridiculous that former Chinese Finance Minister Lou Jiwei has broken Party protocol and spoken out about the issue.

“There are insufficient figures reflecting negative changes [in the economy],” he told a forum held by the China Center for International Economic Exchanges in Beijing last week.

“In contrast, the US has both positive and negative numbers,” Lou said.

Dodgy data:

  • Independent verification of official figures is practically non-existent in the world’s second-largest economy.
  • Beijing tends to “cherry-pick” the sectors and companies that are showing exceptional growth.
  • These are then front-loaded to obscure or water down negative economic numbers.
  • Unemployment is particularly a sensitive subject.
  • Data for nearly 300 million migrant workers are not included in the official statistics.
  • Figures for the underemployed are also airbrushed out.

Hell, it appears, will freeze over before [China] undergoes an economic contraction.

Stewart Paterson, the founder of research group Capital Dialectics

Reaction to the news: “Senior CCP official says what most Wall St research shops will not,” China Beige Book, a research company, tweeted in response to former Finance Minister Lou’s comments.

Delve deeper: China has a track record of manipulating data. In 2019, the Financial Times reported that the economy “was about 12% smaller than official figures indicated,” according to a report by the Brookings Institution, a Washington think-tank. 

Big picture: Nothing much has changed in the past two years, according to Stewart Paterson, the founder of research group Capital Dialectics.

What he said: “If official statistics are to be believed, 2020 saw the Chinese economy grow by 2.3% in real terms. It is an often-repeated statistic in the mainstream media and seldom carries a caveat. Has it been repeated enough for people to believe it?”

To hell and back: “The last time the Chinese economy shrank was 1976. Hell, it appears, will freeze over before the Chinese economy undergoes what in other countries occurs frequently – an economic contraction,” Paterson added in a Capital Dialectics report, entitled China GDP: Growth, Propaganda and National Power, released earlier this year.

China Factor comment: Memo to the Party’s inner circle. The definition for transparency is “being honest and open.” Or, chéngshí hé k?ifàng.